Till they came along, India’s 200,000-plus coffee growers largely depended on the volatile export market, where margins were thin and the risks immense. Even today, only about 30 per cent of India’s total production of 300,000 tonne per annum is consumed domestically, but in value terms, the Indian market, at Rs 2,000 crore, now equals the export market.
...Coffee Day was among the top three exporters of green coffee beans in the mid-’90s, but has since moved down the ladder—deliberately. Siddhartha realised that rather than bet on the volatile global markets, he was better off investing his resources on the vast but virtually untapped Indian market. Incidentally, all the coffee served at Coffee Day outlets comes from the 10,000 acres of plantations that Siddhartha owns. “This gives us control over quality from the bean stage itself and makes value addition easier,” Venu Madhav says.
...He opened his first café at a time when Bangalore was on the cusp of a transformation from a pensioners’ paradise to an IT and lifestyle haven. It was a gamble— Coffee Day was entering a market that had been traditionally dominated by tea—but it paid off. Between 1998 and 2008, domestic coffee consumption went up from 55,000 tonnes to 90,000 tonnes per annum...Siddhartha proudly points out that his chain serves more than 600,000 customers per day. “We serve the finest Indian coffee. Before 1994, good coffee was available in only a few places. Today, Coffee Day has operations in 100 cities and towns across India,” he adds.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.