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Cafe Coffee Day eyes Austria, Germany

Celebrating its maiden brewing success in Austria and Germany, CCD's director is planning to open more outlets there.

india Updated: Nov 06, 2006 13:25 IST

Cafe Coffee Day, India's largest coffee cafe chain, has opened its second outlet in Vienna and plans to open more in Austria soon as it finds the market there has a great potential for growth.

Cafe Coffee Day entered the overseas market with its first cafe in Vienna in November 2005. It recently opened the second 3,000-square-foot café in Vienna's Gastronomie und Kaffeehandels area near the University of Vienna.

"We are planning to open more outlets in and around Vienna and, by establishing ourselves in Austria, we plan to enter the German coffee market, which is a very mature market where the per capita consumption of coffee is very high; so it makes commercial sense for us to do business there," Café Coffee Day director Naresh Malhotra said in an interview.

"The success of our first outlet has let us understand the market and now we are looking at multiple sites; we are on a constant lookout for every potential opportunity," said head of marketing Sudipta Sengupta.

Arvind Singhal, chairman of Technopak Advisors, a Gurgaon-based global retail consultancy firm, said: "Competition in the Austrian- or German-speaking countries is relatively low, but it's a very big market. And being in Austria helps us in logistics and supply chain management as it serves as a gateway to a broader German market."

Vienna, the capital and Austria's largest city with a population of about 1.6 million, is famous for its traditional and majestic coffee houses and it is often said that "coffee comes with a glass of water" in Vienna.

Café Coffee Day, part of the Amalgamated Bean Trading Company, has done an investment of Rs.8 million ($178,690) on each of the cafés in Vienna which are set up as lounges offering some lip-smacking snacks and also meals with a cuppa coffee.

Some popular Indian dishes like keema pau and chicken chettinad are also served in the cafés.

However, Malhotra says, "We are projecting ourselves in the Austrian market as an international global brand and not as an Indian brand. And our differentiating factor is that we have employed for service a young team that has been hired locally."

"People don't really differentiate us - you are either good or you are not, that's what matters," adds Sengupta.

"India is not a coffee-drinking country and this strategy is important from the consumer's point of view to give an impression of a distinct global brand," added Singhal.

Is it that the coffee chain is venturing into the overseas market because the business is booming in India?

"Yes of course, we are now planning to expand to 500 outlets by June 2007 investing around Rs.3 million (approx $67,000) per café and Rs.6 million (approx $134,000) on café lounges. We are also the largest in eastern India. So we are doing pretty good," adds Malhotra.

"That may be one side of the story, however, we cannot ignore the other side as well, that the revenue of these coffee chains still comes from 20-30 big cities," emphasised Singhal of Technopak.

He added: "The very reason why they are looking out of the country may be because they have realised that the market has reached saturation here."