Costa Coffee, a famous British coffee chain owned by Coca-Cola Co., is embarking on an ambitious expansion plan in India, targeting the addition of 40 to 50 new stores each year for the next four to five years. This strategic move comes as Costa Coffee identifies a growing demand for specialty coffee, particularly among India’s youth. 

Details on Costa Coffee

Initially, Costa Coffee started functioning in the Indian market in 2005. It made its debut in partnership with Devyani International Ltd (DIL), which is a food services company. At that time, café chains were relatively new to India, with domestic brands like Cafe Coffee Day leading the market. Starbucks made its Indian debut in 2012 in collaboration with Tata Group. However, the landscape has evolved, with younger consumers showing a heightened interest in coffee, prompting both domestic and international chains to establish a presence in major Indian cities.

Schaillee expressed the company’s intention to seize this growth opportunity, stating, “The Indian market stands out for its potential. It has become one of the top 20 coffee-drinking markets globally, a development that would have been unimaginable a decade ago. With an impressive growth rate of approximately 11%, we anticipate this pace to persist.”

Currently operating 150 stores in India, Costa Coffee is eager to accelerate its growth trajectory in collaboration with its local partner, DIL. The acquisition of Costa Ltd by Coca-Cola Co. in 2018 for $4.9 billion fortified the beverage giant’s global coffee presence. However, in India, the franchise rights for Costa Coffee remain under the purview of DIL. In 2021, DIL also extended partnership with the brand for a 5-year period.

Other Entities

DIL, an entity within RJ Corp., also operates renowned fast-food brands like KFC and Pizza Hut in India, and it’s known for its association with PepsiCo’s largest bottler in India, Varun Beverages. 

Schaillee emphasised Costa Coffee’s commitment and satisfaction with its partnership with DIL, noting that potential conflicts arising from RJ Corp ownership of other properties do not hinder the fruitful collaboration. Despite the burgeoning interest in coffee, Schaillee highlighted that India’s per capita coffee consumption remains relatively low, with individuals consuming only 20 to 30 cups annually, compared to the global average of 200 cups. This underscores the vast growth potential within the Indian market.

Schaillee concluded by affirming that approximately 20 to 25 million Indians, primarily young urban consumers, are increasingly gravitating towards specialty coffee. With rising disposable incomes and heightened global interest in coffee, India is poised for continued growth. As the Indian coffee market outpaces the global average growth rate, it is expected to climb from its current position among the top 20 coffee markets to break into the top 10 within the next decade. The coffee stores have now evolved into hubs for exploration and experimentation, driven by the preferences of India’s vibrant and discerning coffee enthusiasts.

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