New Delhi: British coffee chain Costa Coffee plans to add 40 to 50 stores in India every year over the next four to five years as it expects greater demand for specialty coffee, especially among the youth. The chain, owned by Coca-Cola Co., now considers India among its 10 priority markets, said Philippe Schaillee, Costa Coffee’s global CEO.
Costa entered India in 2005, partnering food services company Devyani International Ltd (DIL). At the time, cafe chains were new to Indians, and homegrown chains such as Cafe Coffee Day led the market development. Starbucks opened in India in 2012, partnering Tata Group. However, things have changed and younger consumers are now spending more on coffee, encouraging both domestic and foreign chains to open in top cities.
Costa wants to capitalize on the growth. “The Indian market stands out for its potential. It has become the top 20 coffee drinking markets globally. That’s not something I would have expected 10 years ago. It is one of the fastest growing; it’s today growing at about 11%. We’re expecting that pace of growth to continue,” Schaillee said, addressing a media roundtable in Gurugram.
In India, the chain currently operates 150 stores. Schaillee, who took over as CEO in April, said the chain is set to fast-track growth along with its local partner in India.
In 2018, Coca-Cola Co. announced the acquisition of Costa Ltd from Whitbread Plc for $4.9 billion, securing a significant footprint in the global coffee business.
However, in India, the Costa Coffee franchise rests with DIL. In 2021, DIL extended its partnership with Costa for an initial period of five years. In India, DIL also operates fast food brands such as KFC and Pizza Hut.
DIL, part of RJ Corp. also operates Varun Beverages, PepsiCo’s largest bottler in India. PepsiCo competes with Coca-Cola globally.
Schaillee said the coffee chain is “committed” and “pleased” with its partnership with DIL.
“If they (RJ Corp) have other properties in their ownership which conflict…then that is a separate reality and not necessarily standing in the way of having a partnership with the best possible franchising partner,” he said.
Schaillee said per capita consumption of coffee in India still low at about 20 to 30 cups per annum, against the global average of 200 cups. This presents room for growth, he added.
“The population within India that is really gravitating towards specialty coffee today is about 20 million to 25 million people. As disposal incomes are increasing and global interests are increasing, India is set to grow. As India’s coffee market is growing at double the average of the world, it will continue to grow to the top 15 position to top 10 position over the next decade,” he added.
Schaillee said young, urban consumers are driving up demand for speciality coffee in India. “The coffee stores have become a hub for exploration and experimentation,” he said.
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Updated: 07 Oct 2023, 05:02 AM IST