Cluster war in Bangalores coffee cups

CCD Mops Up Prime Locales Ahead Of Starbucks Foray 

India's bean king,Cafe Coffee Days founder VG Siddhartha,is brewing a strategy all too familiar to global coffee giant Starbucks: clustering,or saturating,the market. India's largest cafe chain has quietly intensified the battle for upscale locations as Starbucks gets ready to muscle into Bangalore along with the Tatas.

Bangalore-born CCD has already cornered high-consumption locations at a premium in a city with the highest density of cafes roughly 440.(Typically,the idea of a ubiquitous coffee chain is that one must walk no more than five minutes before one hits the next cafe.Its a concept Starbucks has aced in cities like London and New York.) 

Starbucks is planning at least a dozen cafes across the city in its initial burst,say people familiar with its strategy.It is expected to launch in six locations RMZ Infinity on Old Madras Road,Indiranagar 100ft Road,Gaurda Mall,Jayanagar 4th Block,Phoenix Market City in Whitefield,and Koramangala before the year end.This leaves the specialty coffee giant with no footprint in the central business district comprising MG Road,Brigade Road and Lavelle Road.

Bangalores high-street realty scene has been sewed up well by CCD.The best locations in the best locales have been taken, says Harish Bijoor,brand strategist and CEO,Harish Bijoor Consults.

CCD operates 12 cafes around MG Road,Brigade Road and Lavelle Road after a ramp-up in the past 18 months.CCD has also saturated other suburbs like Jayanagar (12 cafes),Koramangala (11) and Indiranagar (9).It also dots Bengaluru International Airport with three cafes.CCD is putting a lot of effort in acquiring spaces that have high visibility.In terms of rentals,they are absorbing prices 10%-15 % above market rates and putting down higher security deposits than the average 6- to 10-month rental values, says Shrinivas Rao,CEO,Asia Pacific,of Vestian,a realty consultancy.

STORM IN THE CUPPA 

CCD operates 1,497 cafes across India,plans to breach the 2,000 mark by 2015 Took 14 years to cross 1,000 mark in 2010;set to double in just 5 years After its listing on NYSE in 1992,Starbucks added nearly 1,000 stores in 5 years

CCD fastest in closing leasing deals 

KRamakrishnan,CCD president,was unavailable for comment.Two months ago,CCD renewed its lease agreement to operate a caf out of 2,000 sqft of open-space area in Barton Centre,MG Road,for roughly Rs 320 per sqft,significantly higher than the market rate.Three buildings away,where the cafs upmarket lounge is located,a large portion of leased space continues to remain vacant for nearly two years now.This,clearly,is an indication of how CCD is keeping competition at bay.

Prashanth Sambargi,partner,Mars Realty,who handles leasing for some of Bangalores coffee chains,says,CCD is now the fastest to closing a leasing deal in the retail sector.They close deals within 30 days against an industry average of three months or more. 

CCD currently runs 1,497 cafes across India and plans to breach the 2,000 mark by 2015.While it took the company 14 years to grow its caf chain to 1,000 outlets in 2010,it plans to double the number in just five years.The narrative is similar to Starbucks after its listing on the New York Stock Exchange in 1992;it added nearly 1,000 stores in the following five years.

CCD founder Siddharthas aggression has stumped other cafe rivals,who are struggling to expand.But can CCD,which has struggled to push up margins,stick to its growth trajectory This is one graph its backers,including Kohlberg Kravis Roberts &Co,will keep watching.