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Bakery cafés offer customised local Indian menus
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Thursday, 02 January, 2020, 08 : 00 AM [IST]
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Umesh Kamble and Archa Shah
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Introduction
Rising disposable income, changing consumer lifestyles and improving standards of living to drive coffee shops / cafés market in India through 2021.
Over the past few years, increase in the number of independent coffee shops / cafés in India can be attributed to changing consumer lifestyles, expanding working population base and growing influence of Western culture. Moreover, these cafes offer customised local Indian menus to address the demands of the local population. Few of the leading chained coffee shops operating in the country include Café Coffee Day, Costa Coffee and Tata Starbucks, among others. These players are anticipated to maintain their dominance in India coffee shops / cafés market through 2021, on account of their expansion plans coupled with continuous efforts towards localising their product offerings.
To grow at a CAGR of over 11%
According to TechSci Research report, “India Coffee Shops / Cafés Market Forecast, Consumer Survey and Opportunities, 2021,” coffee shops / cafés market in India is projected to grow at a CAGR of over 11% during 2016-2021, on account of the growing coffee culture among young population, increasing urbanisation, rising disposable income levels and changing eating and drinking preferences of consumers. Changing work patterns of business executives is also driving demand for such coffee shops / cafés, as these outlets offer services such as free Wi-Fi and entertainment zones.
The market has witnessed growing demand for coffee in India; here are some keynotes of Indian Coffee Retail Market:
1. Entry of International Brands
One cannot ignore the number of coffee chains and outlets lined in every mall or market, wherever it is. International brands such as Café Coffee Day, Starbucks, Costa, and Barista are the few to name but the startups too have invaded this space and trying their luck.
Most people visit these to have an experience of the kind of coffee being served; the demand for coffee too has increased with time.
Every other month these coffee chains run in neck to neck competition to be the owner of highest coffee chains in India.
This is one of the reasons for the growth and expansion of coffee market in the country. Moreover the coffee powder brands such as Nestle and Bru too have tried to satisfy their customers by bringing out new varieties of coffee to the retail market.
2. Affordability
Over the past one decade it is evident that consumption culture, Westernisation and income have made a lot of difference in the retail market.
People now can afford to spend enough on the things they desire for and this has resulted in change of behaviour towards spending on things like coffee, prioritising things as per need and desire. This change in the vision has made all the difference.
Over the last one decade, Indian consumers have shifted from being saving-oriented to be more consumption-oriented. Thus, spending Rs 200-400 on a cup of coffee along with some food is not a big deterrent for today's Indian consumers.
3. Focussing on Needs
Different methods or approach of different companies towards their customers too plays an important role in shaping their consumption as well as prioritising their choice.
Some people prefer different tastes to enjoy in their home space, some prefer strong, roaster, finely grained or unsaturated, thus some brands are trying to extend as many options for satisfying the customers’ need.
One can witness the different ways the other coffee chains serve coffee to their customers, this is one way to attract the customers. Moreover the advertisements play major role in getting more attention of the customers.
4. Reach Out to Different Cities
India is home to not just metro cities but it also includes tier II and tier III cities, small towns, where the café culture is yet to penetrate. For them the coffee is only Nestle and Bru, thus the company should work to reach out to them and serve them variety.
For any business, there is wide range of audience, which has different taste and nose for different products. One can reach out and satisfy them by offering them in low price, so that they can try before they add it in their grocery list of every month.
A company should reach out to small cities, towns, villages for selling their product because the company needs the customer not the other way round.
“In India, coffee shops / cafés market is in developing stage, with majority of demand for coffee beverages emanating from urban centres such as New Delhi, Mumbai, Bengaluru, Chennai, Hyderabad and Kolkata. In addition to metros and tier I cities, new companies and leading market players are targeting expansion to tier II and tier III cities. This coupled with implementation of various government plans to develop smart cities and so on, is projected to drive growth in India market for coffee shops / cafés over next five years,” said Karan Chechi, research director with TechSci Research, a research based global management consulting firm.
Sales of non-carbonated beverages along with foreign cuisines and fast food in India is exhibiting rapid growth, due to growing income levels and rising awareness among consumers. However, the market is being confronted with challenges pertaining to widespread adoption, due to inclination towards traditional beverages, along with high cost of these new offerings. Companies are spending resources in order to increase awareness regarding their products and keep up with global concepts. Thus, changing consumer preferences and tastes are projected to motivate market players to introduce new variety of products. The research findings of the report recommend players to focus on incorporating new types of drinks in their menus, and provide more options to consumers in order to increase sales and strengthen market position along with uncovering a lot of hidden market opportunities.
Despite the challenges faced by bakery cafés, the concept has a strong footing in the market today, and looks set to grow in several cities, adding multiple brands to its fold. The rising disposable incomes of consumers, the greater population of health-conscious, younger people willing to try out new products and cuisines, the growth of consumers in higher and middle income groups, the increased propensity for eating outside the home, the increasing time-paucity, a love for snacking, the need to hang out or socialise, and the growing popularity of takeaway and delivery services, will boost the growth in this market segment.
(Kamble is the founder and CEO, Shah is head consultant, Farm to Fork Solutions. They can be contacted at umeshretail@gmail.com)
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