Café Coffee Day is changing.

Not satisfied with quenching your coffee cravings, the top team at this coffee retail juggernaut is bent on adding variety to your hunger moods too. By Angshuman Paul

There are two monikers that dot virtually every main street of Bangalore – the first is a liquor shop with the United Breweries board displayed boldly at its entrance and the second is the deep red square of another beverage brand - Café Coffee Day (CCD). Incidentally, both brands have scripted their origin and eventual success from this very garden city. Even the head office of Amalgamated Bean Coffee Trading Company (mother company of Café Coffee Day) is located on the Vittal Mallya Road, named after the father of UB Group’s present chairman, Vijay Mallya. Notwithstanding the stark differences in respective turnovers, the similarities between the two brands run even deeper than such skin-deep appearances. UB Group’s flagship brand Kingfisher managed to transcend its almost generic association with beer to boldly venture into the aviation sector; while Amalgamated Bean Coffee Trading Company’s (ABC) 13-year-old flagship brand CCD is now aspiring to do exactly that by moving beyond mere coffee to straddle the gamut of hunger moods of the Indian consumer.

Alok Gupta, Director, Café Coffee Day is especially excited about the positioning revamp for brand CCD and its implications for the coffee retail chain’s future. Donning the role of a barista (see picture) at the spanking new 2,500 sq. ft. Coffee Day Lounge in the heart of Bangalore city, the man and his team had already warmed up for our early morning meeting with their respective cups of Cappucinos (incidentally Cappucino alone contributes almost 30% to the total turnover for CCD) before this author shot off his first query. Why? “Look, there are three categories of consumers at CCD. There are those who want to have coffee; there are the youngsters who wish to hangout and then there are those who want to grab a quick meal. That third category of consumers is growing fast and we want to cash in on to every hunger mood of the consumer so that CCD is the preferred choice even for his meals.

Clearly, ‘HungerMood’ is all set to become their new range of enhanced offerings (from sandwiches to the sweets section) to the consumer with a planned investment of about Rs.150 crore in this fiscal itself. “There will even be more health related products like probiotic yogurt and burgers,” announces Alok. Foodies can also get ready to expect region specific localised menu from CCD in the near future. In fact, the test-marketing of their localised menu has already begun in some regions. In February this year, CCD test-launched the Rajma Chawal meal in select stores in Delhi and NCR; and the month of May saw the rollout of parathas at CCD stores in Punjab and Chandigarh. Maharashtra is next on the localisation radar, but Alok refuses to give any details about the type of menu roll out planned for the state.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).


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Explains Ramesh Viswanathan, Exec. Director, CavinKare

“The only other company like us with a spread of independent brands is Dabur,” points out CKR. Clearly, the man loves comparing himself to the Burmans and hopes to replicate the stupendous success of Dabur in the FMCG segment. Yet, come to think of it, it is Nirma that CavinKare has a lot in common with. Both companies have been tagged as price warriors giving HLL and P&G a run for their money in the detergent and shampoo businesses respectively. CavinKare too got positioned as a price warrior (the sachet player) and has more or less followed Nirma’s footsteps in its heydays. Like Nirma, CavinKare too has diversified into other product categories and is aggressively taking on the urban market now. But here’s the catch. While MNCs first saturated the urban market and are now moving rural; CavinKare is moving in reverse. Being a strong player in the low-income category, CavinKare is now climbing up the ladder to also straddle the upper middle class group. So will CavinKare be able to replicate its success among the urban consumers or will it fizzle out, like Nirma did? “It (Nirma) played on price alone. Price is a vehicle to get entry into the market, but not a differentiating factor in the long run,” clarifies CKR, arguing that CavinKare has already discarded its low price image. He gives the example of Meera, their herbal hair wash powder, which is today priced at Rs.2 (at par with Sunsilk and Clinic Plus). Even fairness cream Fairever has been priced higher than HUL’s Fair&Lovely. Acquired last year for Rs.28 crore, the Maa range of fresh fruit drinks (pitted against Mazaa, Slice & Frooti) have also been shrewdly priced at Rs.13 for 250ml (Mazza is available at Rs.12 for 200ml). So, CavinKare entered the business as a price warrior, but on its part, it has made a valiant effort to discard that positioning. The recent launch of Chik Satin shampoo is an effort to develop this fresh brand imagery. Explains Ramesh Viswanathan, Exec. Director, CavinKare, “The aim of Chik Satin was to focus on the ‘bottle’ consumer whose shampoo needs are very different from that of existing Chik consumers.” With a premium look and feel, Chik Satin is focusing on attracting the urban consumer. “The strategic tie up with Coty for Adidas and Jovan is also aimed at gaining greater strength in the urban and metro markets,” adds Viswanathan.

But changing consumer mindset is not easy, says Anand Ramanathan of KPMG. “Transcending from a premium to a mass positioning is easy, but the reverse is not true,” he says, adding that even as CavinKare reverse straddles (via Chik Satin Shampoo or Nyle premium shampoo), it is imperative for them to not deviate from existing brand imagery, a fatal move for its existing consumer base. The reverse is also true. Ramanathan gives the example of CavinKare’s toilet cleaner brand Topp Mopp. “It is difficult for a relatively new entrant–despite competitive pricing to survive,” he says. Topp Mopp’s positioning was similar to rivals like Reckitt Benckiser’s Lizol in urban markets. But since toilet cleaners as a category belongs to the SEC A segment, CavinKare’s imagary (that of a SEC B and C player) created a disconnect. Result? Despite a big distribution push, Topp Mopp’s brand imagery did not coincide with the group’s positioning and the product failed.

But an undeterred CKR is moving ahead confidently with all cylinders blazing. His big bets now to secure a pan-India urban base are coming from areas like personal grooming, restaurants and dairy business. Trends in Vogue, CavinKare’s salon retail chain is expanding. Cashing in on the growing personal grooming market, CavinKare has also launched two separate beauty salons – Limelite (a unisex salon for urban youth) and Green Trends (family beauty salon), straddling high and mid income groups. “With our experience in personal care, it was natural for us to enter the retail of personal grooming services,” shares B. Nandakumar, CEO, Trends In Vogue. Having spread its footprint across the southern market (Bangalore, Hyderabad, Chennai, Trichi, Coimbatore, Madurai), CavinKare is now expanding its salon business in the north as well. And while the business may seem like a me-too of HUL’s Lakme Salon business, Nandakumar is quick to refute the notion. “Unlike Lakme beauty salons, we don’t use our own products but source professional products. Besides, all our Trends In Vogue parlours are self-owned,” he explains.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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AMCs find a shelter...

While market volatility is keeping investors away, fund houses have identified infrastructure as the new bet to lure them, says Deepak Ranjan Patra

When a country’s finance minister enhances allocation to urban infrastructure by a mind-boggling 87% to Rs.12,887 crore with a promise that infrastructure investments will be further increased to more than 9% of the GDP in next five years, you definitely need no rocket science to find out which sector will make it to the top of the investors’ minds. Yes, infrastructure is hot today in India and no one wants to miss this clear opportunity to make some moolah. So, how could the mutual fund industry stay sideway? Almost all Asset Management Companies (AMCs) have geared up to this infra-growth. Asserts R. K. Gupta, MD, Taurus Mutual Fund, “In coming six months you will see all fund houses having their own infra funds dedicated to the sector.” But the question remains, are these AMCs really hoping to offer a good return to the investors or are they just trying to skim the market when the buzz is still heavy?

Bandeep Singh Ranger, Chairman, IndusView avers, “Finance Minister’s commitment to increase investments in the infrastructure sector to more than 9% of the GDP by 2014 from 5% currently and other rural development and welfare programs opens scope for investment opportunities.” Moreover, Finance Minister’s inclination towards Public Private Partnership clears ground for the private players to avail a cool share in the returns to be generated. This combined with the fact that India is now considered as the preferred destination for doing business among the emerging BRIC countries (World Bank Report titled ‘Doing business 2009’) makes it a point worth mentioning that the sector may also see some foreign investments flowing in. Considering the expectations, possibilities, “the sector will now become hotter than ever,” claims Vinayak Banarjee, Chairman, Feedback Ventures.

However, AMCs’ rendezvous with the infrastructure companies is nothing new. Infra stocks always have been a part of different mutual fund schemes for the simple fact that majority of the BSE 500 companies belong to the domain. As a matter of fact, stocks of infra-based companies form a large portion of many of the diversified equity funds. The only new thing about the current trend is that this time around the AMCs are coming up with sector specific infra funds like ‘Reliance Infrastructure fund’ launched by Reliance Mutual Fund promising to invest in infrastructure and infrastructure related companies only. The fund managers too seem upbeat on the returns as Sundeep Sikka, CEO, Reliance Capital Asset Management told to media during launch of the new fund, “Undoubtedly, infrastructure is a key priority for India and we also hope a spurt of infrastructure spending in the economy on the back of the stable government and ease of project financing. Moreover, the valuation looks more attractive. The right time is now to invest in infrastructure and infrastructure-related firms.”

Explaining the prevailing bullishness in the sector R. K. Gupta explains, “Over the last two years other sectors are by and large flat or downward. The only good sector available is infrastructure. Moreover, it’s at a poor level in the country and government can’t survive without taking to higher levels. That means there is a better future in the sector with ample opportunities.” Perhaps that’s why Gupta feels that almost every fund house will soon have some infra-related funds in their portfolio. But the question is what impact will this flurry of infra funds have on the investors? Well, a lot of confusion as to which fund to chose.

Definitely it’s a tough time for the retail investors. While the abrupt volatility at the stock market is pulling them from entering into the market, launch of a number of infra-based funds are giving their investment strategy a tough time in case of mutual funds. The most common advice given by analysts at the moment is to go for existing funds with proven track records rather than jumping into the NFO bandwagon. The very basic reason for the same is that most of the new funds are typical sector funds, where the constituents are associated with similar type of risk that is attached to the sector. For the same, such funds often lack proper defensive stocks ending up as high-risk investments. In fact, the risk quotient associated with infrastructure sector as such is more than many others. That’s why, it’s time when investors need to be a little meticulous in their approach even though they know that infrastructure is the next big thing for them.

Deepak Ranjan Patra

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
Management guru Arindam Chaudhuri’s latest blockbuster book, Discover The Diamond In You
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