DAYANANDA SAGAR UNIVERSITY
SCHOOL OF COMMERCE AND MANAGEMENT STUDIES
Hosur Main Road, Kudlu Gate, Bangalore-560068
OPERATIONS MANAGMENT
Assignment-01
Coffee Day Global Limited
Master of Business Administration
By
Aswathy B. (CMS23MBA102)
N. K. Vidisha. (CMS23MBA166)
Pooja A. (CMS23MAB175)
2nd semester MBA
Under the guidance of
Prof. Muralidhara G. V.
Department Of MBA, School of Commerce and Management
Studies, DSU, Bangalore
2023-2025
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Coffee Day Global Limited
Business Description
Company Revenue: Coffee Day Enterprises Limited reported earnings results for the
third quarter and nine months ended December 31, 2023. For the third quarter, the
company reported sales was INR 2,569.1 million compared to INR 2,438.5 million a
year ago. Revenue was INR 3,342.8 million compared to INR 2,644 million a year
ago.
Industry Revenue: Coffee Day Global Limited is a major player in the Indian coffee
industry, with a reported 40% market share.
Competitive advantage: The company's primary competitive advantage lies in its
vertically integrated business model. It controls the entire coffee value chain from
plantations to retail outlets, which is unique in the Indian market. This integration
allows for quality control, cost efficiencies, and brand consistency.
Products/services:
- Coffee plantations (15,000 acres)
- Coffee exports (about 28,000 tons annually)
- Café Coffee Day outlets (over 1,800 across 209 cities)
- Fresh & Ground retail outlets
- Coffee Day Xpress kiosks
- Coffee Day Take Away
- Packaged coffee products
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Market: Primarily focused on the Indian market, with a growing international
presence. The company has expanded to international markets, with its first overseas
Café Coffee Day outlet in Vienna, Austria.
Suppliers: The company sources coffee from its own extensive plantations (15,000
acres) and a network of coffee growers. It has a "highly disciplined and dedicated
network of agents who operates throughout the major coffee growing areas of India."
Customers:
- Retail consumers through café outlets and packaged products
- Corporate and industrial buyers
- International coffee importers (exports to USA, Europe, Japan)
Company history and founders
Coffee Day Global Limited, formerly known as Amalgamated Bean Coffee Trading
Company Limited, was founded in 1993 by V.G. Siddhartha. The company's roots lie
in the coffee-growing regions of Chikmagalur, Karnataka.
Siddhartha, coming from a coffee plantation-owning family, saw an opportunity in the
deregulation of the coffee board in 1993. He started by exporting coffee to the USA,
Europe, and Japan. In 1994, the 'Coffee Day' brand was born.
A significant milestone was reached in 1996 when Siddhartha opened the first Café
Coffee Day outlet, pioneering the café culture in India. This concept rapidly expanded,
becoming a cultural phenomenon among Indian youth.
By 2000, Coffee Day had become India's largest coffee exporter. Over the next two
decades, the company expanded its operations across the entire coffee value chain,
from plantations to retail outlets, creating a uniquely integrated business model in the
Indian coffee industry.
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Leadership team
While the PDF doesn't provide extensive details about the leadership team, it does
mention key figures:
- V.G. Siddhartha: Founder, Chairman, and Managing Director. He is described as a
visionary leader who foresaw the demand for Indian coffee abroad and within India.
- Rajeev Gupta: President of Coffee Day Global Ltd, in charge of all activities at the
headquarters in Hassan and the registered office in Chikmagalur.
- Javeed Parveez: Senior Manager at the Chikmagalur office, overseeing public
relations, finance, accounts procurement, production, storage, and plantation
management.
The company also has a structure including Senior General Managers (SGMs)
overseeing various departments such as Public Relations, Finance, Production &
Maintenance, Accounts, and Procurement.
Facility location and rationale
Key facilities of Coffee Day Global Limited include:
- Corporate Headquarters: Bangalore, Karnataka
- Registered Office and Plantations: Chikmagalur, Karnataka
- Head Office: Hassan, Karnataka
- Coffee Curing Facilities: Chikmagalur and Hassan
The rationale for these locations appears to be strategic:
1. Chikmagalur and Hassan are in the heart of India's coffee-growing region. Known
as the "Coffee Cradle of India," Chikmagalur is where coffee cultivation in India
began. This proximity to coffee plantations ensures fresh supply and quality control.
2. The coffee estates are spread over the Western Ghats, reaching up to 4500 ft above
sea level. This altitude and climate are ideal for coffee cultivation, particularly for
high-quality Arabica beans.
3. Bangalore, as the capital of Karnataka and a major tech hub, serves as an ideal
corporate headquarters. It provides access to skilled workforce, good infrastructure,
and connectivity to other major cities.
4. The location of curing facilities near the plantations allows for quick processing of
harvested coffee, maintaining quality and freshness.
5. These locations also have historical significance for the company and its founder,
rooting the business in the traditional coffee-growing regions of India while
expanding nationally and internationally.
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Vision and Mission
Vision: "To be present in every space where coffee can be an integral ingredient. We
aim to be one of the top three players, worldwide in the coffee retail segment."
This vision statement demonstrates the company's ambition to expand beyond just
being a coffee retailer or producer. It suggests a desire to integrate coffee into various
aspects of consumer life and to achieve global recognition and market share.
Mission: "To find and extract the boundless potential in all that we do--just as we
have for every cup of coffee."
This mission statement draws a parallel between the company's approach to business
and the process of extracting flavor from coffee beans. It implies a commitment to
maximizing value and quality in all aspects of their operations.
The company also states its aim "to provide world-class coffee along with great
service at an affordable price to consumers" and "to spread the culture of coffee
throughout the country and Globe."
Industry dynamics and corporate strategy
The coffee industry in India has been growing, with increasing domestic consumption
and a strong export market. Coffee Day Global Limited has positioned itself uniquely
in this landscape through its corporate strategy of vertical integration.
Key aspects of the corporate strategy include:
1. End-to-end integration: The company controls every stage of the coffee value
chain, from plantations to retail outlets. This allows for:
- Quality control at every stage
- Cost efficiencies through economies of scale
- Brand consistency from bean to cup
2. Diversification within coffee: While maintaining focus on coffee, the company
has diversified its offerings to include various retail formats (cafes, express outlets,
packaged products) and market segments (retail consumers, corporate clients, exports).
3. Expansion: The company has aggressively expanded its retail presence, growing to
over 1,800 Café Coffee Day outlets across 209 cities. It's also beginning international
expansion.
4. Brand building: The company has successfully built the Café Coffee Day brand as
a youth-oriented, aspirational yet affordable brand in India.
5. Export focus: Maintaining a strong presence in the export market, shipping to
major coffee-consuming nations.
This strategy is unique in the Indian market due to its scale and comprehensiveness. It
helps the company follow its vision by:
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- Enabling presence in multiple "spaces where coffee can be an integral ingredient"
- Building a strong, recognized brand that can compete globally
- Creating efficiencies that allow for affordable pricing while maintaining quality,
supporting expansion
Operating strategy
Coffee Day Global Limited's operating strategy is closely aligned with its corporate
strategy of vertical integration. Key aspects include:
1. Plantation management: The company owns and manages 15,000 acres of coffee
plantations, ensuring a steady supply of quality coffee beans.
2. Procurement network: Beyond its own plantations, the company has developed a
network of agents in coffee-growing regions to secure additional supply.
3. Processing and curing: The company operates its own coffee curing facilities,
allowing for quality control and customization of coffee processing.
4. Diverse retail formats: The company operates multiple retail formats including
Café Coffee Day outlets, Fresh & Ground stores, Coffee Day Xpress kiosks, and
Coffee Day Take Away, catering to different consumer segments and occasions.
5. Export operations: The company maintains a strong focus on exports, shipping to
major coffee markets globally.
6. Quality control: With control over the entire value chain, the company emphasizes
quality at every stage, from plantation to cup.
7. Technology integration: The company has invested in technology for various
operations, including coffee processing and retail management.
8. Training and development: The company focuses on training its staff to maintain
service quality across its large network of outlets.
This operating strategy aligns with the corporate strategy by:
- Ensuring consistent quality and brand experience across all touchpoints
- Enabling cost efficiencies through scale and integration
- Supporting the company's expansion plans by providing control over supply and
quality
- Allowing for innovation and customization at various stages of the value chain
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SWOT Analysis
Strengths:
- Vertical integration across the entire coffee value chain
- Large scale of operations (plantations, processing facilities, retail network)
- Strong brand recognition, especially among youth
- Diverse retail formats catering to different market segments
- Quality and efficiency in coffee production due to control over the entire process
- Extensive procurement and distribution network
- First-mover advantage in the Indian café market
Weaknesses:
- Dependence on manual labor in some operations, despite high technology use
- Some Café Coffee Day outlets incurring losses due to poor location choices
- Lower employee stability compared to some competitors
- High dependence on agents for coffee bean procurement
- Inability to produce certain high-quality coffee beans domestically, necessitating
imports
Opportunities:
- Growing domestic demand for coffee in India
- Increasing international demand for Indian coffee
- Potential for further international expansion of Café Coffee Day
- Rising café culture in tier-2 and tier-3 Indian cities
- Growing corporate and industrial coffee buyer’s segment
- Potential for new product development in the coffee and allied sectors
Threats:
- Entry of international coffee chains into the Indian market (e.g., Starbucks)
- Fluctuations in foreign exchange rates affecting export profitability
- Climate change and weather variations affecting coffee production
- Potential saturation in metropolitan markets
- Changing consumer preferences and health trends
- Volatility in global coffee prices
Expert opinions on operations
Working at Coffee Day Global (CCD) in India can be a dynamic and fast-paced
experience. Employees often describe the work environment as lively and energetic,
given the nature of the coffee business and the constant flow of customers. Customer
service skills are highly valued, as interactions with patrons play a significant role in
the overall customer experience.
Employees at CCD are typically trained to handle various tasks efficiently, such as
taking orders, preparing beverages, and maintaining cleanliness in the store.
Teamwork is essential, as staff members often collaborate to ensure smooth
operations during busy periods.
Overall, working at CCD can offer a blend of customer interaction, multitasking, and
a fast-paced work environment, making it an engaging and rewarding experience for
many individuals.
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CSR activities
Coffee Day Global Limited integrates corporate social responsibility (CSR) into our
operations, achieving commercial success while respecting people, communities, and
the environment. Our CSR activities reflect our commitment to economic, social, and
environmental sustainability.
Purpose
This report highlights CSR efforts to facilitate livelihood opportunities, socio-cultural
development, and environmental sustainability in our operational areas.
Focus Areas
The CSR Committee, including at least one independent director, is responsible for:
- Formulating and recommending the CSR Policy.
- Recommending CSR expenditure to the Board.
- Monitoring CSR Policy implementation.
Board Responsibilities
The Board of Directors is responsible for:
- Approving the CSR policy.
- Ensuring the Company spends the required amount on CSR activities.
- Ensuring included activities are undertaken.
Implementation & Monitoring
CSR activities are driven by a dedicated team, forming the Core Monitoring Group
under the guidance of CSR Committee members and the Board. The group reviews
periodic reports, conducts independent assessments, and provides assistance through
visits, meetings, and progress reporting by project teams.
CSR Budget
The Company’s CSR expenditure is 2% of the average net profits of the preceding
three financial years. Any surplus from CSR projects will not form part of business
profits.
Monitoring and Evaluation
Regular monitoring and evaluation are conducted through site visits, progress reports,
and independent assessments by the Core Monitoring Group to ensure transparency
and effectiveness.