An India focused detailed comparison of Costa Coffee and Starbucks in India. Their STP, PASTEL, other competitors etc. have been discussed in detail.

1. K J Somaiya Institute of Management Studies and Research
STARBUCKS Vs. COSTA COFFEE: Comparative Analysis
Prepared By:
Shreyansh R Kejriwal, PGDM(FS) Roll No. 26
Under the Guidance of:-
Prof. Neha Gupta
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2. 2
Contents
Introduction ..................................................................................................................... 3
History ............................................................................................................................. 3
Coffee Market in India ...................................................................................................... 4
Let’s have a look at the major coffee outlets working in India .......................................... 5
OTHER COFFEE HOUSES ................................................................................................ 6
Indian Market ............................................................................................................... 6
PESTEL ............................................................................................................................. 7
COMPETITION .................................................................................................................. 7
Porter’s 5 Forces............................................................................................................... 8
SWOT .............................................................................................................................. 8
STARBUCKS .................................................................................................................. 8
COSTA COFFEE.............................................................................................................. 9
SEGMENTATION ............................................................................................................... 9
Targeting Starbucks:...................................................................................................... 9
Targeting Costa Coffee: ................................................................................................. 9
Marketing MIX ............................................................................................................... 10
Product ...................................................................................................................... 10
Price .......................................................................................................................... 11
Place .......................................................................................................................... 11
Promotion .................................................................................................................. 12
CONCLUSION.................................................................................................................. 12
Refrences ................................................................................................................... 13

3. Introduction
In the last ten years, the coffee brewing industry has seen so much activity in terms of
massive changes in the landscape of coffee brewing companies. These changes range
from mergers and acquisitions to changing consumer tastes and finally, to different
branding strategies. These activities are expected to continue over the course of the next
five years.
3
History
Starbucks
Three friends, Jerry Baldwin, Zev Siegl and Gordon
Bowker, who all had a passion for fresh coffee, opened
a small shop and began selling fresh roasted, gourmet
coffee beans and brewing and roasting accessories.
The company did well, but things began to change in
the 80s.
Leading retailer, roaster and brand of specialty coffee
in the world Sells drip brewed coffee, expresso-based
hot drinks, snacks, mugs and coffee beans Company
started in 1971 in Seattle in Washington, U.S.
Costa Coffee
Bruno & Sergio Costa set up their famous coffee
roastery in Lambeth, London in 1971, supplying
local caterers and Italian coffee shops with an
exciting coffee, slow-roasted the Italian way.
People couldn’t get enough of it and by 1978 the
first Costa espresso bar opened in Vauxhall Bridge
Road in London. Today it is the second largest
coffeehouse chain in the world behind Starbucks.

4. To this day they still use the same method of slow-roasting our coffee beans, serving the
brothers’ authentic blend of 6 Arabica beans to 1 Robusta in 500 coffee shops all over the
world.
4
“THE PERFECT CUP” IN FOUR “M”
1. Miscela Blend:
Costa has a unique blend we call the Mocha Italia
2. Macinatura Grind:
Every cup of Costa is made from freshly ground beans; ground to the exact
consistency to ensuring perfect extraction of flavors & aroma. We use
the Ferrari of grinders-the Mazzer–to ensure the “Perfect Cup”
3. Macchina Machine:
Costa shops use specially designed Italian espresso machines. They
have been tuned & perfected over the last twenty years to achieve high
volumes of perfect espresso [the heart of every coffee drink]
4. Manna Hand:
The skill of the Barista influences the “Perfect Cup” So they undergo extensive &
intensive training at our Coffee Academy to reach the excellence that’s Costa
Coffee Market in India
The humble cup of coffee that cheers up mood, initiates conversation and relaxes you from a
tiring day is brewing up a storm in India. The Indian ready-to-drink (RTD) tea and coffee market
has picked up a great business in the last 5 years.
Reports say that the market is expected to grow to a whopping Rs 2,250 crore by 2017- thanks to
the cafe culture among urban youth.
The domestic market, which currently stands at an estimated Rs 1,100 crore, is dominated by
outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee Bean & Tea Leaf.
The latest entrant is Starbucks and with many more in the pipeline.
More than 1,200 cafes have sprung up across India in the past decade, mostly from six organized
chains, clocking an average annual growth of around 40%. They have made the cafe industry -

5. currently capped at Rs1000 crore -one of the fastest growing organized retails.
Let’s have a look at the major coffee outlets working in India
5
CAFÉ COFFEE DAY
Cafe Coffee Day or CCD is India’s largest cafe chain with its first outlet at Brigade Road,
Bangalore in July 11, 1996. As of August 2013 it has 1319 outlets spread across 28 states
of India.
The man behind CCD is V.G. Siddhartha. He is the chairman of the Amalgamated Bean
Coffee Trading Company Ltd. (ABCTCL) which also grows coffee in its own estates of
10,000 acres. The cafe chain is a division of ABCTCL.
CCD is expanding their market reach through brand extension by launching mineral
water, cookies, and chips under their brand name. The brand plans to reach the 2000
outlet mark by 2014.
BARISTA
Barista Coffee Co. Ltd, India’s second largest organized cafe chain with 225 outlets
(according to a 2010 report) and plans to launch 40-45 outlets a year in the next two-three
years. This chain of espresso bars was established in February 2000 by the Barista
Coffee Company Limited.
A 34.3% equity stake was sold to Tata Coffee in 2001 and the remaining 65% stake was
bought by Sterling Group owned C Sivasankaran in 2004. Later, he also bought the
remaining Tata’s stake. In 2007 Sterling group sold Barista to Lavazza. Lavazza is an Italian
manufacturer of coffee products.
Barista Lavazza has estimated annual revenue of Rs 200 crores. In 2014, Lavazza sold the
coffee shop chain to Carnation Hospitality Pvt. Ltd. for an undisclosed sum
COSTA COFFEE
This is United Kingdom’s largest coffee brand, which entered India in September 2005
through an exclusive franchisee tie-up with Devyani International Ltd.

6. Andy Harrison, CEO of Whitbread PLC was quoted recently in an interview that Costa
Coffee wants to expand to 300 outlets in India. The brand has its presence in all major
cities of the country including outlets in Mumbai, Bengaluru, Delhi, Gurgaon, Noida,
Pune, Agra and Jaipur. Last year, Costa opened its 100th store in India, in Mumbai.
6
STARBUCKS
The latest entry in India`s coffee chain industry is Starbucks. Starbucks came to India in
2012 in partnership with Tata Global Beverages.
The Seattle-based company, which has operations in 61 countries, was planning to open
its store in India for the last 5 years. Finally, the first outlet was open in Mumbai in
October 2012.
Beginning with stores in Delhi and Mumbai in calendar 2012, the retail stores will be
developed in cities across the country.
OTHER COFFEE HOUSES
Here are few coffee cafe chains that have their presence in India. They started with very
few outlets in the major cities of the country but are now branching out across the
nation quite fast.
Australian cafe chain Gloria Jean’s Coffees, which entered India in 2008 through the
Landmark Group’s hospitality section, Citymax, positions itself at the upper end of the
market. It plans to open 36-40 outlets in the next few years.
Other such coffee chain is the Coffee Bean & Tea Leaf which also ventured in India in
2008 with an outlet in Select CityWalk in Saket, New Delhi. CBTL worldwide has around
812 outlets but in India they have around 17 outlets.
Indian Market
Size of the market in 2012 - $230 Million
Expected market size in 2015 - $400 Million
Number of speciality Coffee Shops in India today – 2400
Expecded to increase to 4000 in 2015

7. 7
PESTEL
Political Coffee beans are grown in developing countries. Discussions about
work conditions, child labor. Also political influence by tariffs and
taxes.
Economic The key business challenges for the industry as a whole firmly relate
to the economic recession from 2008, as consumers become much
more cautious with their discretionary spend due to the high
unemployment and personal debt.
Social/Cultural People spent more and more money on coffee (UK: Tea: £623m,
Coffee: £738m)5. Customers do not only go to coffee shops to drink
a coffee but also to sit down, and relax.
Technological Better and cheaper coffee machines are available for home usage
(Senseo).
Environment As raise of environmental awareness, coffee companies have to be
concerned about the way their coffee beans are produced, the way
they design their supply chain and the way they prepare and sell
their products.
Legal See Political
COMPETITION

8. 8
Porter’s 5 Forces
The competition on the coffee market is quite high.
A unique strategy is important to attract customer.
SWOT
STARBUCKS

9. 9
COSTA COFFEE
SEGMENTATION
Targeting Starbucks:
• Age: Young adults
Nice place to relax, chat, chilly music
Trendy coffees which present their lifestyle
• Age: Middle age
Place to calm down, relax, chat, read a book
Possibility for a small (healthy) snack with a great coffee
• Psychographic: Coffee lovers
Trendy, fresh, high quality, new developed coffee (some: fairtrade)
• Psychographic: Atmosphere lovers
A great third place
Targeting Costa Coffee:
• While evaluating their consumer market the conclusion was that the ideal consumer’s
economic profile will be
– Upper Middle Class
– Privileged Class
• While the age demographics will be:
– Students and Youngsters

10. 10
– Professionals
– Families
– Mature Consumers
• Gender and Ethnic/Religious Background was researched to have minimal or no effect
on the choices concerning coffee made by consumers and their patronage of coffee
houses.
Marketing MIX
Product

11. 11
Price
Place

12. 12
Promotion
CONCLUSION
Costa Coffee has been able to remain one of UK's leading coffee brewing companies for
more than a century now primarily because of the execution of the company‟s branding
and positioning strategies to perfection. Add to the mix the company‟s dedication to high
quality of service and the formula for success is at hand. Moreover, the utilization of the
appropriate knowledge management tools is necessary for their products to reach out to
people even in different cultures. However, certain points have to be taken into
consideration by Costa Coffee regarding knowledge management tools. Since their
income is relatively higher than most coffee brewing companies, the time for
implementation of their chosen knowledge management tools would take longer than
usual, aside from being expensive. But since the goal of Costa Coffee is towards a long-term
dominance and stability in the brewing industry, then the pursuit of these
promotional campaigns will be beneficial for the company in the long run.
Starbucks has appealed to such a wide target market; it seems every product introduced
will be an instant success (sodas, teas, ice creams, pastries). As the most innovative
company, it‟s no surprise that the new technological addition, the Starbucks Card,
boosted sales and helped growth during a time when the economy was struggling.
“Starbucks went back to basics, and they‟ve approached the basics with a science and
intensity that no one has ever done before.”

13. 13
Refrences
1.Financial Times: Costa tops table of coffee outlets (2007)
http://www.allegra.co.uk/pdf-files/2007-05-28-ft.pdf
2. Allegra Strategies: UK Coffee Bar Market (2004)
http://www.allegra.co.uk/pdf-files/2004-12-00-fs.pdf
3. Keynote: Market Assesment 2007: Coffee and Sandwhich Shops (2007)
4. Allegra Strategies: UK coffee bar market still growing despite recession (2009)
http://www.foodbev.com/report/uk-coffee-bar-market-still growing-despite-recession
5. Sunday Times: How Starbucks colonised the world (2008)
http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article33
81092.ece
6. Starbucks: A brief history of Starbucks (2009)
http://starbucks.co.uk/enGB/_About+Starbucks/History+of+Starbucks.htm
7. London Evening Standard: Starbucks wakes up to £47m loss a year (2009)
http://www.thisislondon.co.uk/standard/article-23748711 coffee-giant-pins-hopes-
on-bohoredesign-for-branches-in-capital.do
8. Marketing Magazine: Starbucks launches heritage branding in UK
http://www.marketingmagazine.co.uk/News/MostDiscussed/964788/Starbucks-launches-
heritagebranding-UK/
9. Starbucks: Company Fact Sheet (2008)
http://www.starbucks.com/aboutus/Company_Factsheet.pdf
10. http://www.catalogs.com/info/food/the-history-of-starbucks.html
11. http://ivythesis.typepad.com/term_paper_topics/costa_coffee_s