Barista brews a battle

Boby Kurian

Ravi S. Deol, President and CEO of Barista cafe chain, reminisces - a 1,200 sq. ft. cafe overlooking the sea front in Mumbai's Chowpatty. Media celeb Pritish Nandy, a frequent visitor nowadays, settles down with cappuccino for a refreshing ten minutes...

Similar images flit past as Deol recaps Barista's first year of operations. Barista comes across as a pepped up, modern version of Indian Coffee House in the seventies.

What's Barista? It's a branded liquid coffee retail chain promoted by the New Delhi-based Java Coffee Company. The brand takes its name from the Italian term for a coffee brewmaster. Barista claims to serve Indians with the best espresso available in the domestic market.

The menu suggests that Barista espresso - with 92 per cent Arabica - may come at a slightly expensive price. ``That's what you pay for a quality product and an experiential brand,'' says Deol.

So what makes Barista tick? ``The coffee bean, the machine and the brewmaster sets us apart,'' Deol adds. Barista picks the aptly ripe bean and washes it carefully before roasting it in smaller lots for a longer time till it turns a rich brunette. The bean is roasted enough to shed almost 20 per cent weight. It gives coffee a rich sweeter taste as against the common sour acidic taste.

Barista's Cimpelli machine differs from automatic dispensers seen in other cafes, says Deol. This machine is akin to Italian espresso machines and has a specific dispensing time lasting 20 seconds. A thick and rich layer - crema - tops the Barista espresso and the sugar takes a while to percolate. The layer forms again when the sugar dissolves.

Deol claims that his brewmasters are trained under genuine Italian baristas. ``We want to be known as a retailer of fine coffee,'' says Deol. But rivals may not allow Barista to get away with the `country's-best-espresso' tag. For instance, Qwiky's, a coffee pub chain incorporated in the US, claims to have an exhaustive product list which could even humble Starbucks, a global leader in retailing branded speciality coffee.

Brewing business: Barista's first cafe opened in New Delhi last year and then sprang up a chain of 17 stores spread across three cities, including Mumbai and Bangalore. The chain hopes to close the current financial year with a turnover of Rs 30 crores.

Barista hopes to expand its retailing network to 50 cafes by March 31, 2001. ``This will end our development's first phase and will hopefully give us a critical mass in operations,'' says Deol. Barista has earmarked Rs 27 crores for investment in the first phase. Setting up a Barista cafe, Deol adds, costs close to Rs 50 lakhs. The average floor area of the cafe is 1,200 sq. ft., but it could go up to 2,000 sq. ft. as the chain makes a foray into South India.

Barista's business plan - in a nascent market for liquid coffee retailing - hinges on market segmentation. Barista, which claims to be `experiential coffee', seeks to position itself as a fine cafe and not just a coffee pub - the way Qwiky's and Cafe Coffee Day are normally categorised. Its target segment includes professionals, working couples and families in the SEC-A and SEC-B categories who detest the loud ambience of coffee pubs.

Industry observers tend to define Barista's role in consumer perception as an urban getaway rather than a hangout like a coffee pub. But the question being raised is whether the liquid coffee retailing market here is big enough to be sliced up on consumers' psychographic nuances. The market accounts for less than two per cent of the annual domestic coffee production. The coffee experts predict a boom, but there's no collated data to sustain these claims.

Barista's plans to grow through market segmentation has bagged the industry's endorsement. ``Barista's strategy to segment the market is crucial to the growth of the nascent liquid coffee retailing,'' says Harish Bijoor, Vice-President (Marketing), Tata Coffee Ltd. He, however, says that the initial segmentation will be driven by price rather than subtle factors such as cafe ambience or brand positioning.

Serving it right: Barista aims to thrive on the experiential coffee platform. This would mean espresso served in a soft cafe ambience at the right price. It sums up Barista's brand image, a useful plank for market segmentation.

The cafe ambience, says Deol, is crucial in distinguishing Barista from the competition. The brightly lit cafe in rich orange hues topped with Italian furniture and some jazz wafting in, lends a relaxed air.

``We are penetrating nascent consumer needs and to that extent, customer interaction is a crucial discovery,'' says Deol. This lends scope for a more accurate psychographic customer profile and provides Barista a chance to link up its marketing efforts.

The cafe chain's joint promotions with Planet M and Crosswords reiterates the bond between coffee aficionados and book or music lovers. Today, Planet M and Crosswords have incorporated small Barista bars in their stores. ``We are closer to subtle lifestyle marketing than the typical punch-in-the-nose FMCG type push,'' says Deol.

Barista espresso starts at Rs 20 and has a few variants priced at around Rs 40. This differentiates Barista from coffee pubs. Qwiky's or Coffee Day has espresso priced at Rs 10 and above. Barista's Cappuccino comes for Rs 30 and above, while food on its menu is outsourced from The Oberoi.

Has lifestyle ambience and strategic pricing helped Barista? Deol says repeat customers account for 70 per cent of Barista's business. ``People spend an average of 45 minutes in our cafe,'' he quips and claims that Barista has weaned away customers who used to frequent five-star hotels for good coffee. ``Data shows that our target consumer spends nearly 57 per cent of the day outside home. He comes here perhaps for an excellent 10 minutes topped with good coffee,'' adds Deol.

Storm in a coffee cup? Barista's expansion plans are the most frenetic in liquid coffee retailing. It's currently looking at the possibility of setting up 100 cafes this year at an estimated cost of nearly 65 crores. The aim is to tap the top 15 markets in a big way.

Barista's short-term expansion will outstrip similar efforts by Coffee Day and Qwiky's. Coffee Day is expected to invest nearly Rs 100 crores spread over three years. Qwiky's plans to set up close to 90 outlets by 2003 and it may tap the capital market to achieve it. Industry analysts suggest that Barista's aggression is aimed at being the first player where ever possible. ``There's a distinct first-mover advantage in this business,'' say analysts.

The speculation on Starbucks' impending Indian launch has perhaps revved up Barista's frenzied expansion. Starbucks' entry will hasten the market segmentation process. Its possible that Barista wants to grab its share of the pie before Starbucks arrives. ``We expect Starbucks to enter India within a year. But do remember that Starbucks is struggling wherever they lack the first-mover advantage. South-East Asia is one instance,'' says Deol. The battlelines are drawn, will the early bird get the worm?