Cafe Coffee Day(CCD) Case Study
2 Minute Summary
Shocked by the News that Founder of CCD has committed Suicide. Cafe coffee day(CCD) was the first-ever coffee chain opened in India.VG Siddhartha was the man behind making coffee popular in a nation of tea-lovers. Also, CCD owned Asia’s single largest coffee estate and India’s best coffee brand. The first CCD outlet was set up on July 11, 1996, at Brigade Road, Bangalore, Karnataka. V.G. Siddhartha opened the first CCD outlet with an initial investment of ₹ 1.5 crores. the major challenge faced by the cafe coffee chain was to make a revolutionary change in the Indian culture where the majority of the population prefer drinking tea rather than coffee. To stand up against the competition, CCD has built its retail strategy and named it 3As strategies like Affordability, Accessibility, and acceptability. CCD founder V.G. Siddhartha who feared of achieving a target of 500 tonnes, ends up selling 6,500-7,000 tonnes of branded coffee, exports about 28,000 tonnes of coffee and sells another 2,000 tonnes locally each year and has a curing capacity of 75,000 tonnes (largest in the country). Additionally, his cafes attract at least 40,000 to 50,000 visitors per week and presently operating 1,740 CCD stores in around 250 cities. Full detail in the blog.
I was shocked by the News that Founder of CCD has committed Suicide.
What was the reason behind it?
According to resources, He was under pressure from a private equity partner and other lenders.
This ultimate blog is dedicated to India’s best coffee brand “CCD” and it’s owner Mr VG Siddhartha.
I have curated all the information about CCD(Cafe Coffee Day).
Cafe coffee day(CCD) was the first-ever coffee chain opened in India.VG Siddhartha was the man behind making coffee popular in a nation of tea-lovers.
Also, CCD owned Asia’s single largest coffee estate and India’s best coffee brand.
It was the one with the tag line ‘A lot can happen over coffee’, Café Coffee Day was the one who touched the hearts of millions of Indian youth, assuring them that all they need is a cup of coffee and a peaceful place to talk it all out!
And so it happened.
India was strictly a tea-loving country.
Let me tell you everything from pin to plane about the brand who successfully made coffee popular in a country full of tea lovers.
We will be talking about –
- Cafe Coffee Day(CCD) Case Study
- We will be talking about –
- HOW CAFE COFFEE DAY(CCD) STARTED
- Challenges Faced By CCD
- How CCD Overcome Challenges
- Marketing and advertising strategies of CCD
- SWOT ANALYSIS OF CAFE COFFEE DAY
- BUSINESS EXPANSION AND GROWTH
- Other Businesses of CCD
- MILESTONES AND AWARDS ACHIEVED
- TOP MANAGEMENT OF CCD:
- MAN BEHIND CAFE COFFEE CHAINS
- Cafe Coffee day Owner Death:
- The downfall of Cafe Coffee Day
- COCA-COLA BUYING CCD?
- Latest Updates:
- Financial Statistics of CCD:
HOW CAFE COFFEE DAY(CCD) STARTED
I am sure you have visited CCD now and then but do you know the history of the cafe coffee brand who brought the coffee culture to India.
During my college years when I started visiting the cafe coffee day, I had no idea about the success story of India’s largest Cafe Coffee chain.
V G Siddhartha from Chikmagalur district of Karnataka was the man behind changing the beverages culture of India with a variety of drinks and side dishes hard to resist.
Coffee Day Global which is the parent of the Cafe Coffee Day chain was incorporated in 1993.
The first CCD outlet was set up on July 11, 1996, at Brigade Road, Bangalore, Karnataka. V.G. Siddhartha opened the first CCD outlet with an initial investment of ₹ 1.5 crores.
Siddhartha happened come across a German business owner, who was interested in buying coffee beans from him for his “leading coffee brand in Germany – Tchibo”.
During that brief discussion with the German businessman, he told his story of how his band had started in a small 10 ft. shop in Hamburg. This inspiring tale of the Tchibo gave Siddhartha an outlook of a different world altogether & opened his eyes and it also gave him a wonderful idea.
Challenges Faced By CCD
Having done with the initial foundation, the major challenge faced by the cafe coffee chain was to make a revolutionary change in the Indian culture where the majority of the population prefer drinking tea rather than coffee.
After the initial struggle, the homegrown cafe chain came a long way, credited with the start of coffee shop culture in India but then it finds itself facing tough competition not just from the international chains such as Costa Coffee, Starbucks or Barista but also from various domestic players and concept cafés.
How CCD Overcome Challenges
To stand up against the competition, CCD has built its retail strategy and named it 3As strategy :
What worked best for the Indian cafe coffee chain was its combination of aspiration and affordability.
Even as it gave coffee an attractive makeover, CCD’s prices stayed well below its rivals.
Ensuring that it remained the favourite hangout choice for school and college students or young adults on meagre paychecks from their first jobs.
It wasn’t just restricted to the metro cities. If there’s one singular claim that Coffee Day can makeover all of its rivals, it is that it took coffee to cities and towns across the country, and offered the same experience everywhere.
They always believe in serving an experience along with the coffee.
They have ensured that the cafes are at an arm’s reach.
Today, coffee is not just seen as a beverage but a social glue that brings people together to relax and unwind.
“Let’s catch up at CCD,” is probably one line most Indians have said or heard at one point or the other over the last two decades.
Marketing and advertising strategies of CCD
As we have discussed above, CCD’s strategic approach was based on the 3 A’s i.e. Affordability, Accessibility, and Acceptability. 3A’s are the significant factors contributing to the growth of the brand.
Secondly, Digital Marketing has become an integral part of Café Coffee Day’s marketing plan.
CCD’s fan base is overwhelmed with over 5 million fans on its social media pages and consistently engaging customers on Facebook, Instagram, Twitter, Youtube, etc.
The youth was the key target and early adopters of trends, they also evolved their strategy and became more digital-centric as they engaged with the new age world.
CCD marketing also constantly ensures the continuous active engagements of the consumers, like they conducted the ‘Latte Art Festival’ – where customers were served coffee topped with creative latte art designs.
As CCD goes digital, it is also looking at innovation in user experiences by adopting new technologies to enhance customer service.
SWOT ANALYSIS OF CAFE COFFEE DAY
* Products of extremely good quality and taste
* Highest no. Of stores
* High brand equity among the youth
* Vertical integration
* High pricing
* Wrong-site selection
* Lacks strength to maintain the brand
* Coffee cafe industry is one of the fastest-growing industry in Asia
* Enter and attract international markets
* Rising income of people
* Growing competition from global and local coffee chains
* Growing attrition rate
BUSINESS EXPANSION AND GROWTH
CCD founder V.G. Siddhartha who feared of achieving a target of 500 tonnes, ends up selling 6,500-7,000 tonnes of branded coffee, exports about 28,000 tonnes of coffee and sells another 2,000 tonnes locally each year and has a curing capacity of 75,000 tonnes (largest in the country). Additionally, his cafes attract at least 40,000 to 50,000 visitors per week.
The company, opened its first store in 1996 in Bengaluru, is presently operating 1,740 CCD stores in around 250 cities.
As of 2015; CCD makes revenues worth $450 Million approx., employees 5000+ people, and has 1530 outlets across India, Austria, Czech Republic, Dubai & Karachi.
Other Businesses of CCD
COFFEE DAY EXPORTS
Coffee Day Exports is all about growing, trading, retailing and exporting world-class coffee. It has a heritage of over 130 years.
One of the largest exporters of green coffee in India, since 1999. We also export to the Middle East, Europe and Japan.
Coffee Day Exports has invested in research and development and applied the learning successfully to improve the promotion of various coffee blends and augment its exports.
Visit www.coffeedayexport.com for more details.
COFFEE DAY HOTELS & RESORTS
2008 was a landmark year for Coffee Day Global Limited.
Coffee Day Hotels & Resorts was formed as a subsidiary of Coffee Day Global Limited, the Chikmagalur resort of The Serai was declared open.
Visit www.theserai.infor more details.
MILESTONES AND AWARDS ACHIEVED
1. Café Coffee Day won the “Times Food Award” under the category of “Best Coffee Bar” in 2007
2. Café Coffee Day won the Burrper’s Choice Award by users of burrp.com in 2008.
3. Coffee Day Global won an award for “Retailer of the Year” by Asia Retail Congress 2009
4. Café Coffee Day won the Indian Hospitality Excellence Award in 2010”
5. Café Coffee Day was ranked as 26th Most Trusted Service Brand in India and by Brand Equity (Economic Times) in 2012
6. Café Coffee Day won the Best Coffee Bar Award in 2012
7. Café Coffee Day was awarded “The NCPEDP – Shell Helen Keller Award 2013” by National Centre for Promotion of Employment for Disabled People.
8. Coffee Day Global got awarded for “Best Customer Service in Café Restaurant” by Star Retailer Awards 2013
9. Café Coffee Day won the Brand Excellence Award in the retail sector in 2013
10. Coffee Day Global was awarded the bronze prize by the Coffee Board of India for being the third-best exporter of green coffee in 2012
11. Coffee Day Global was awarded as “Retailer of the Year” for the retail excellence by ABP News in 2014
12. Café Coffee Day was ranked as 22nd Most Trusted Service Brand in India, as 27th Most Exciting Brand in India under the category of “Food Services” in Indian 2014
13. The Promoter, Mr V G Siddhartha was awarded ‘ET Retail Hall of Fame’ for his contribution to the growth in the retail sector in 2014
TOP MANAGEMENT OF CCD:
- R Ram Mohan
CFO, Coffee Day & Chairman, SICAL
- Jayraj C Hubli
Director, CFO & CIO Coffee Day Global
- A Venu Madhav
Director, Coffee Day Global &
CEO – Café Coffee Day
- Sadananda Poojary
Company Secretary & Legal Head,
- Balachandar Natarajan
Group Head, Human Resources,
- Shankar Narayan
President, Vending Division,
Coffee Day Global
- Shankar Venkataraman
- Venkatesh M
Director, Coffee Day Hotels & Resorts
- Nitin Bagamane
- Shashi Bhushan
- Ketan Sheth
Director of Research, Way2Wealth
- Rajeev Gupta
President, Exports Division,
Coffee Day Global
- Sanjiv Mediratta
Group Advisor, Food & Beverages,
- C J Jayanth
President, Fresh & Ground Division,
Coffee Day Global
- Dr Pradeep Kenjige
Vice President, R & D Division,
Coffee Day Global
- Late M D Mallya
MAN BEHIND CAFE COFFEE CHAINS
V.G. SIDDHARTHA – Was the man whose mind was behind the successful coffee chains in India. He was a man less famous by his name but his hard work speaks it all.
He could have easily survived with the 350 acres of the estate his family-owned, but instead, he was too ambitious and decided to start something that appealed to him, something created by him, something on his own.
His full name was Veerappa Gangaiah Siddhartha Hegde, started his career as a trainee trading in Indian stock market at JM Financial under the tutelage of Mahendra Kampani in 1983, after completing his masters’ degree in Mangalore University.
He bought Sivan Securities in 1984 and turned it into a highly successful investment banking and stockbroking company.
It was renamed Way2Wealth Securities in 2000.
In 1992, Siddhartha started his coffee business – Amalgamated Bean Company Trading, an integrated coffee business which ranges from procuring, processing and roasting coffee beans to retailing of coffee products.
The company’s revenue stands at Rs 2,016 crore for FY18.
After the success of the coffee venture, Siddhartha launched India’s first coffee café — Café Coffee Day — on Brigade Road, Bengaluru in 1996. Internationally, CCD outlets are present in Vienna, Czech Republic, Nepal, and Egypt.
He also served on the board of directors of Mindtree, GTV, Liquid Krystal, Way2wealth Brokers, Coffee Day Natural Resources, and Way2wealth Securities.
Cafe Coffee day Owner Death:
On Tuesday 30th July 2019, Cafe chain Coffee Day Enterprises has confirmed that its Managing Director VG Siddhartha has been missing since Monday 29th July and that the company with the help of concerned authorities are tracing him.
On, 29th July 2019 Siddhartha had told his driver that he was going for a walk near the bridge and asked him to wait at a distance.
Meanwhile, a fisherman had claimed that he saw someone jumping off the bridge. When he did not return even after two hours, the driver approached the police and lodged a missing complaint. And from their a seed of vg siddhartha death is hoped.
Shares of Coffee Day Enterprises dropped 20 per cent and hit the lower circuit limit as well as 52-week low of Rs 154.05 as a piece on BSE after news surfaced that its founder has gone missing.
On Wednesday, 31st July 2019 his body was found at the Hodge Bazaar beach by local fishermen who informed the police.
The body had washed ashore near Ullal and was fished out by local fishermen.
VG Siddhartha left a letter allegedly wrote to Coffee Day Enterprises board, he says that he “failed to create the profitable business model despite my best efforts.”
He goes on to say: “I would never cheat or mislead anybody intentionally, I have failed as an entrepreneur.”
News reports say the man who made coffee popular in a nation of tea-lovers referred to three main issues in his letter to the board: “pressure from private equity partners forcing him to buy back shares”, “harassment from the previous DG income tax ”, and “tremendous pressure from other lenders”.
All the issues centre on the liquidity and debt that Siddhartha and Coffee Day Enterprises were facing, and which ultimately culminated in the entrepreneur selling his stake in Mindtree earlier this year.
The downfall of Cafe Coffee Day
I personally like the business model of CCD, but it has a lot of drawbacks.
Let’s discuss major reasons for the DOWNFALL of CCD
BSR associates were their main auditor who used to audit their outlets.
The auditor wrote a letter to the shareholders of CCD that they have not audited 40 subsidiaries of Cafe coffee day.
This was the reason the shareholders backed off and denied to provide further funds.
Meanwhile, the Income Tax (IT) department raided on Cafe Coffee Day (CCD) retail chains and found about Rs 362 crore concealed income.
VG Siddhartha in his letter mentioned that Income tax department was attaching their shares on two separate occasions to block their Mindtree deal and then taking the position of their Coffee Day shares, although the revised returns have been filed by them.
Because they were in such a heavy debt, they started taking short term loans in the form of debentures with high-interest rates to pay off their long term debt.
This resulted in a more heavy debt burden.
COCA-COLA BUYING CCD?
The US beverage giant COCA-COLA is eyeing a significant foothold in the cafe business space in India.
Soft drinks maker Coca-Cola has initiated pre- talks with Cafe Coffee Day (CCD) before the death of the founder V.G. Sidhartha to acquire a substantial stake in India’s largest coffee chain. If the deal is initiated, it would be Coca Cola’s second major investment.
Now, the promoters of the company plan to restart the pending talks with COCA-COLA for selling off their significant stake in Cafe Coffee Day(CCD). A spokesperson for Coca-Cola has refused to comment on this news.
And calls it what he termed “speculative news”.
As you know, Cafe coffee day chain is all over debt and also being pressurized by the lenders.
Coffee Day Enterprises is the parent company of Sical Logistics, has decided to sell the entire stake in the company to ensure the debt removal of the company.
The report says Coffee Day Enterprises has also hired ICICI Securities as an adviser for the potential transaction.
As soon this news spread over the internet, the share price of sical logistics and also share price of coffee day enterprise jumped to the highest and locked upon the upper circuit of the day.
Financial Statistics of CCD:
Categories: Coffee, Food and Beverage, Retail
Headquarters Regions: Asia-Pacific (APAC)
Founded Date: 1996
Last Funding Type: Venture – Series Unknown
Number of Employees: 5001-10000
Legal Name: Coffee Day Global Limited
IPO Status: PrivateCompany
Type: For Profit
LinkedIn: View on LinkedIn
Twitter: View on Twitter
Number of Funding Rounds: 3
Total Funding Amount: $71M
Number of Investors: 2
Cafe Coffee Day is funded by 2 investors. Brand Capital and Sequoia Capital India are the most recent investors.
I hope I have shared everything in this article. If I missed out anything, do share your views in the comment section below.