Capturing India's Percolating Coffee Market
Published : June 02, 2011 in India Knowledge@Wharton
The Café Coffee Day (CCD) location in Mumbai's upmarket Lokhandwala area is a favorite haunt of 23-year-old television actress Sweety Sangar. She visits this coffee shop, part of India's leading café chain, at least twice a week with her friends. "I love the ambience and the crowd here," says Sangar, sinking comfortably into a lounge chair. "I even discuss films [for possible work] with Bollywood directors here." Just across the road is Barista, another popular coffee outlet. Two 30-year-old friends-cum-entrepreneurs dig into rich chocolate brownies in between working on their laptops. They are waiting to interview a candidate for their start-up. "This is a cool place to grill someone," says Tejas Mahurkar, one of the pair. In the same neighborhood is Café Mocha, yet another coffee shop. Like CCD and Barista, it too is a favorite with college students and young adults.
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According to New Delhi-based research and consultancy firm Technopak Advisors, there are over 1,500 coffee cafes in India at present; of these, around 1,000 have opened in the past five years. Valued at around US$185 million, the organized café market in India is estimated to be growing at a compound annual rate of 25%. Stirring up the market is India's growing youth segment: around 50% of India's 1.2 billion people are 25 or younger. By 2015, this is expected to increase to 55%. For this segment, particularly those with steady, disposable incomes, coffee shops serve as a social hub. "Coffee chains offer a basic emotional need -refuge. They are... [continues]
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