Costa Coffee revamps strategy as competition intensifies in Indian market

In 2018, Coca-Cola acquired Costa Limited from Whitbread PLC for $4.9 billion, expanding its presence in the coffee market.

Vinay Nair, general manager, India & Emerging Markets, Costa Coffee, said that India continues to be a “focus” market for the coffee chain. “That’s because of all the demographics that we’ve seen about India and the consumption; secondly, coffee is at a very interesting stage in India. I think youngsters have got some exposure to coffee, they want to do a lot of exploration, they want to know what specialty coffee is all about, what are the origins of coffee etc. Maybe the pandemic fueled some of that…So we want to stay super relevant to the current and the new generation of coffee consumers. It is something which is part of the larger, global positioning, but it is something that we’ve crafted for India,” Nair said in an interview with Mint.

As Costa expands, it will open new stores in the country’s top eight to ten cities. The chain will also tap premium office spaces, airports and highways. 

“We continue to have strong expansion plans. From being a brand, which was very concentrated in the north, we believe that over the next three years we will be in eight or ten top cities. Secondly, on the channel piece—when you come into a new city, we look at airports, highways, premium offices etc. Without sharing numbers, we are pretty bullish. That’s part of the reason that we are also bringing this refreshed positioning,” Nair added.

Over the last six to eight months the company has also re-designed some stores, upgrading them to appeal to younger consumers. “We’ve just launched what we call the uplift store designs in India. This is work that we’ve done with the global design team, Indian architects and designers. So there’s a, there’s a there are seating and spaces where it individual can work, there are spaces which are community tables, etc,” he said.

Of the 60 new stores added in the last one year, close to 45 were modelled on the new design format. “So between zoning within the store, which supports our consumers wanting to express themselves in different ways or spend time with each other, to the work we have done with our baristas, and the overall design of the store, it’s warm, bright, younger. This is what you’ll start noticing in our stores which links back to the positioning that we’re taking,” he added.

As India’s cafe market becomes increasingly crowded, with homegrown coffee chains as well as established foreign players stepping up their presence, Costa Coffee seeks to capitalize on evolving consumer preferences for experimentation and specialty brews.