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Cafe Coffee Day(CCD) Case Study


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 –

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 Managerial Heads

Man Behind Cafe Coffee Chains

Cafe Coffee Day Owner Death

Downfall of Cafe Coffee Day

COCO-COLA buying CCD ?

Latest Updates

Financial Statistics

HOW CAFE COFFEE DAY(CCD) STARTED


I am sure you have visited CCD every 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 Chikmangaluru 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.


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 brand 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 :

Affordability
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 favorite hangout choice for school and college students or young adults on meager paychecks from their first jobs.

Accessibility
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.

Acceptability
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

STRENGTHS
* Products of extremely good quality and taste
* Highest no. Of stores
* High brand equity among the youth
* Vertical integration

WEAKNESSES
* High pricing
* Wrong-site selection
* Lacks strength to maintain the brand

OPPORTUNITIES
* Coffee cafe industry is one of the fastest-growing industry in Asia
* Enter and attract international markets
* Rising income of people

THREATS
* 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.

cafe-coffee-day-export-business-ccd-case-study

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.

cafe-coffee-day-export-business-case-study

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, 
    Coffee Day

  • Balachandar Natarajan
    Group Head, Human Resources, 
    Coffee Day

  • Shankar Narayan
    President, Vending Division, 
    Coffee Day Global

  • Shankar Venkataraman
    Director, Tanglin

  • Venkatesh M
    Director, Coffee Day Hotels & Resorts

  • Nitin Bagamane
    Chairman, Tanglin

  • Shashi Bhushan
    CEO, Way2Wealth

  • Ketan Sheth
    Director of Research, Way2Wealth

  • Rajeev Gupta
    President, Exports Division, 
    Coffee Day Global

  • Sanjiv Mediratta
    Group Advisor, Food & Beverages, 
    Coffee Day

  • 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
    Ex-Independent Director

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.

https://www.youtube.com/watch?v=mYeI07h1ABw


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.



Shares of Coffee Day Enterprises dropped 20 percent 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 Hoige 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 center 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.

Downfall of Cafe Coffee Day

I personally like the business model of CCD, but it has a lot of drawbacks.

Lets discuss about major reasons of the DOWNFALL of CCD

BSR associates was 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 coffe day.

This was the reason the share holders 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 Sidhartha 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 form of debentures with high interest rates to pay off their long term debt.
This resulted in more heavy debt burden. 

COCA-COLA BUYING CCD?

(NEWS)
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”.

Latest Updates:

As you know, Cafe coffee day chain is all over debt and also being presurized by the lenders.

Coffee Day Enterprises being the parent company of Sical Logistics, has decided to sell the entire stake in the company to ensure the debt removal of the company.

Report says, Coffee Day Enterprises has also hired ICICI Securities as 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

Website: www.cafecoffeeday.com

Facebook: Cafecoffeeday

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.

Updated on 27th August 2019

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I hope i have shared everything in this article. If i missed out anything, do share your views in the comment section below.

Cafe Coffee Day(CCD) Most Detailed Case Study| Founder VG Siddhartha
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