According to Costa Coffee’s Global CEO, Philippe Schaillee, India holds a prominent position among their “priority” markets. The company plans to consistently expand its presence in the country by opening approximately 50 specialty coffee stores each year. Costa Coffee, currently under the ownership of beverage giant Coca-Cola, is optimistic about India’s potential for growth. This optimism is based on several factors, including the increasing number of young consumers who are transitioning from tea to coffee and a simultaneous rise in disposable income levels.
As part of their expansion plans, Costa Coffee intends to broaden its reach beyond major cities. This expansion strategy involves exploring opportunities in diverse segments, including travel hubs like airports, train stations, and office campuses. The CEO highlighted that Costa Coffee will customize its approach for these locations with specific propositions.
Furthermore, Costa Coffee, having recently inaugurated its 150th store in this location, is prioritizing the augmentation of like-to-like sales in each store.
When asked about Costa Coffee’s growth in the Indian market, Schaillee in a media roundtable here said,” When it comes to Costa, we are very happy with the growth rates in terms of store openings. We have a partner, which is committed to growth.”
“We are looking at 40-50 stores per year,” he said.
However, he also added, “If we see that there is a crisis for whatever reason, and we actually have to close a couple of stores, we will do it too. We have to be very agile.”
Costa Coffee operates in India through its franchise partner, Devyani International Ltd (DIL), which has recently celebrated the opening of its 150th store in the country.
It’s worth noting that DIL is promoted by RJ Corp Ltd, a company that also serves as a promoter for Varun Beverages Ltd (VBL), the bottling partner of PepsiCo.
According to DIL’s most recent annual report, as of March 31, 2023, the company was operating a total of 112 stores and concluded the fiscal year with revenue from operations amounting to INR 101.8 crore.
In FY23, the average daily sales (ADS) for Costa Coffee stores in India amounted to INR 35,000 per store.
In line with its business expansion strategy, DIL recently forged a strategic partnership this week with prominent multiplex operators PVR Inox. The collaboration involves offering Costa Coffee’s artisanal hot and cold coffee at specific high-end cinema screens.
According to Schaillee, India is currently ranked among the top 20 coffee markets worldwide. Similar to other nations with a tea-drinking tradition, there is a notable transition towards coffee consumption in India, primarily driven by the younger generation.
Schaillee added that in major metropolitan cities of countries with strong tea-drinking traditions, per capita coffee consumption has reached levels similar to the averages seen in the US and Germany, and this shift has occurred over the past decade to fifteen years.