NAME: SANMAN K.

SHINDE
SUBJECT: BUSINESS ENVIORNMENT
ROLL NO. 54
TOPIC: LAUNCHING BARISTA LAVAZZA IN USA (ASSIGNMENT)
CLASS: MBA CORE-A





EXECUTIVE SUMMARY
Barista Lavazza (India)
Barista Lavazza is a chain of espresso bars in ndia.
Headquartered in Noida, Barista currently has espresso bars across
ndia, Sri Lanka, Bangladesh and the Middle East. t was founded in
1997 by Amit Judge and was part of his group of companies. He sold
part of the equity to first Tata Coffee. Then after he and Tata Coffee
fell apart, Sterling Sivasankaran then bought over the firm. n 2007,
Sterling divested all their stake to Lavazza. Barista Lavazza is
currently owned by Lavazza, taly's largest coffee company. Coffee is
supplied by the ndian roaster Fresh and Honest, headquartered in
Chennai. The latter is also owned by Lavazza. As of 2009, the chain
has 200 stores in ndia, with estimated annual revenue of Rs 200
crores.
Barista was the fastest brand to make it to the list of super
brand's and is ranked among the top 50 phenomenon's that changed
ndia.
History
O The first Barista Lavazza was opened at Basant Lok, New Delhi
in Feb 2000. Lavazza traces its origin back to 1895.
O Lavazza is the sixth largest coffee roaster in the world.
Operating in over 80 countries, it has a 46.5% share in the
talian retail market.
O Barista Lavazza is known as a pioneer of ndian Cafe Culture.






LAUNCHING OUR FRANCHISEE IN UNITED STATES.
O Below is a graph for the consumption of coffee in America for
the years 2006, 2007 and 2008:
O

Age '06 '07 '08
18 24 31% 37% 26%
25 39 47% 44% 47%
40 59 59% 61% 61%
60 + 73% 74% 71%
O Production and ndustry:
Coffee is one of the world's more important primary commodities.
The coffee producing belt includes approximately 70 countries
worldwide and employs approximately 20 million people.
nformation from the United States Department of Agriculture
shows us that the world coffee production in 2008/2009 is forecast
at a record 138.4 million bags or 132.276 pounds.
The Brasil Coffee House, for example, imports only select naturally
processed green coffee exclusively from growers in the Cerrado
and South Minas region of Brasil. The Brasil Coffee House
franchises the option of owning and operating one of these unique
plantation style coffee stores.
PRODUCT PLAN.

PRODUCTS AND THER UNQUE FEATURES:




Hazelnut Mocha :
Your favourite Caf Mocha now with the added flavour of
toasted hazelnuts




Sunset Sparkle:
Sparkling thirst quencher with the fruity flavours of
strawberry and mango




Ginger Fling:
The zing of ginger is sure to refresh you in this interesting
freshly brewed ice tea cocktail

cocktail



For people who would prefer a rich ice cream shake
the Barista Frappe now comes with a new Hazelnut
flavour. The Nut Mug which allows guests to be their
own brew master is also available. Here the Barista
trademark cappuccino comes deconstructed a cup
of frothy steamed milk with a shot of espresso and
Amaretto Flavour (an talian non alcoholic liqueur with
strong almond flavour) on the side. Mix to taste!
Corn & Spinach Sandwich


A scrumptious of spinach tossed with corn and crumbled cottage
cheese served in whole wheat bread.


Mediterranean Veg Sandwich


Pan grilled pepper and zucchini with gherkins and jalapenos served
in wholesome multigrain bread.
Chicken SaIsa Sandwich

Texmex salsa with herbed chicken served in multi grain bread. Add a
dash of Mexican sizzle to your Chicken sandwich
Lime Mojito Freeze

A delicious fresh mint and lime mocktail.
Granita Mango


ce shavings blended with lots of mango pulp to create a cold slushy
drink








INDUSTRY/MARKET ANALYSIS

SWOT ANALYSS OF BARSTA
Strengths:
O Claim to sell the best coffee.
O Strong Brand image.
O Excellent Human resource.
O Large Number of outlet.
O n house sourcing of coffee beans
O Espresso-Highest selling coffee

Weaknesses:
O Perceived as an expensive brand.
O Self Service for the customers.

Opportunity
O Strong brand recall
O Tie-ups with other companies for promotion.

Threat:
O Coffee Substitute.
O Rise in the cost of coffee and dairy products.
O Competition from national and international players.


Competitors
O Cafe Coffee day - Coffee shops are expanding their market
through brand extension. There is always a fierce competition
between Barista Lavazza and Cafe Coffee day. CCD launches
its mineral water, cookies, chips, t-shirts, mugs etc. Barista is
adding a new range of beverages and eatables, mugs, jewel
sippers, candles and soft toys etc. Since CCD has 460 cafes in
80 cities thus is more accessible to the customers as compared
to Barista's 230 coffee retail outlet. Currently CCD has tapped
the coffee shop industry in ndia, out of 1400 coffee shop retail
outlets registered in ndia, 1016 belong to CCD. n order to
increase CCD's market presence in ndia and abroad, Coffee
Day Holdings, the parent company of CCD, secured
investments totaling US $125 million from UK based firm
Standard Chartered Private Equity Limited and US based
private equity and venture capital firm New Silk Route Partners.
While competitors like Barista Lavazza and Costa Coffee
mostly focus on the top 20 percent who are able to afford over
US $3 per espresso drink, CCD caters to all except the lowest
25 percent of the ndian consumers.
O Costa Coffee - With only 40 outlets operational across the
country, Barista Lavazza is facing stiff competition from Costa
Coffee. t is located only in metros as Costa is an urban format
and location plays a crucial role. Although it made a few
mistakes when it came to ndia in 2005 like replicating the same
UK model in ndia and opening stores at wrong locations, it has
managed to bounce back. Their most profitable venture till now
is from the off premise business where they are setting up
kiosks in marriages, seminars and meetings. n the last quarter
of 2009, Costa has seen a profitable 24 percent growth.


















OPERATIONAL PLAN
PRODUCT DEVELOPMENT
Research
Our research is the backbone of our quarterly menu refreshment
process. We leverage Consumer Trends to launch products with
higher acceptance and thus launch Guest Centric Product
Development. Our R&D and Product teams spend 4 hours each
month at stores / behind the Counter & Product ideation is thus based
on observation and guest feedback. We track F&B studies across the
world & understanding ndian trends and fitment. Our research helps
us to identify key global trends & refresh our product line accordingly.

nnovation
Barista Lavazza is a 3 dimensional brand experience. Our focus has
always been to provide a differentiated offering. We do this by using a
guest touch point model that focuses on the product innovation,
refreshing ambience and warm service.
At Barista Lavazza, we launch a new line of food and beverage -
every quarter. The launches are based on international trends, guest
feedback and internal research. We will continue to innovate along
these lines and launch products that delight our guests.
Our target audience has a global lifestyle and a truly international
outlook. Our guests appreciate the truly international line of
beverages served at Barista Lavazza and our warm environment. Our
focus will be on innovation and continuously providing guest relevant
experiences within the Barista Lavazza store.




MARKETING PLAN

Strategies adopted by Barista:

1) Barista positioned itself as a lifestyle brand with talian
neighborhood.

2) Alliance with Tata coffee would supply food items like
baguettes, croissants, cookies, sandwiches, pastries and desserts.

3) Every month, it introduced and focused on a particular type of
coffee. The idea was to change customer's occasional indulgence
and make it a habit and educate them about the original coffees. t
also developed store-in-store concept by focusing on themes that
compliment coffee, such as music, books and art.

4) Barista entered into marketing tie-ups with planet M, crossword
and Ebony to set up it Espresso's at the corner. The company also
entered branded merchandising with caps, coasters, co's and
cups.

5) Barista entered home brew segment with freshly grounded
coffee. The company extended its product portfolio from roasted
coffee range to single origin coffee

6) Barista's adopted a strategy on which it segmented itself to the
elite class. This class has high potential because these people
associate with anything that is of status symbol, they spend very
high. So Barista choose this segment contains people with big
designations like MD's, Doctors, CEO's and people belonging to
elite class. They like to be in a place
which is classy and luxurious like Barista.




Other Strategy:

Coffee Mugs in Orange and Blue which cost Rs 55 and Rs 99T-
Shirts which cost Rs 150Barista has also started a new concept of
Barista merchandise. Barista Merchandise is available only at
selected Barista espresso bars in Delhi, Mumbai, Kolkata, Chennai,
Hyderabad and Bangalore. n Barista Merchandise customer can
take home different types of beans and have coffee of his own taste.
Some of the Barista Merchandise is as follows:
1. French Press.
2. Barista House blend

One of the most interesting things to keep in mind with regards
to all the coffee chains is the manner in which they have blended into
the ndian culture. t's not that these were foreign franchises, but the
very fact that spending Rs. 50/- for a cup of coffee was not a routine
thing for the ndian consumers.
So, these chains had to make sure that they were able to
attract the consumers by making themselves a part of the ndian
culture. One thing in this regard that they have done is that they have
shaped their menus to be flexible enough so that they can adjust to
changing situations such as weather.
For this very fact, the ndian consumers were in for a pleasant
surprise when they found out that they can have local delicacies like
'Aam Panna, Mango Shake' in these coffee chains as well. ts Not
that the taste would be the same like the older days, but still it was
close it could get to the original taste






WORD OF MOUTH PUBLICITY:
Experience@Espresso Bar
At Barista Lavazza, the guests are believed to be the brand
ambassador and its success is highly dependent on the word of
mouth publicity done through them. Barista Lavazza is committed to
offer a 3 dimensional brand experience and focuses on store
ambience, food and beverages and marketing activity within the store
topped with warm and friendly service. n order to increase the
customer's brand experience, Barista Lavazza concentrates on
numerous touch points such as the design of the service, the rank of
its service, the value of its goods and the quality of its products. t
also focuses on themes and paths that harmonize coffee like guitar,
scrabble, chess, songs, arts and books, some outlets also provide
Wi-Fi connectivity to the internet users.













FINANCIAL PLAN
Franchise Structure & Initial Investment

Barista provides a compelling business opportunity by offering an
attractive package which includes a great product and a strong brand
with proven worldwide success. This is Barista's first steps in the US
market and benefit from a well organized system and concept that
was developed through many years of experience in the restaurant
business.

Financial Terms
nitial franchise fee: $55,000
Royalties: typically 7% of sales (paid monthly)

Sources of Finance
Traditional Sources of Finance
nternal resources have traditionally been the chief source of finance
for a company. nternal resources could be a company's assets,
factoring or invoice discounting, personal savings and profits that
have not been reinvested or distributed among shareholders.
Working capital is a short term source of finance and is the money
used for a company's day-to-day activities, including salaries, rent,
payments for raw materials and electricity bills.

Non-Ownership Capital
Non-ownership capital includes funds raised from lenders, such as
banks and creditors. Companies typically borrow a fixed amount from
a bank, at a predetermined interest rate and with a fixed repayment
schedule. Certain bank accounts offer overdraft facilities. This is used
by companies to meet their short-term fund requirements, as they
usually come at a very high interest rate.

GROWTH PLANS

Barista brews $ 200 crore plan
Barista Coffee Company plans to invest $ 200 crore ($ 2 billion) in
three years for ramping up its facilities.
"The coffee chain would add 100-120 outlets in three years in United
States. At present, the company has 140 outlets across the nation.
Barista is scouting for investors for the growth plans. Barista had
appointed Stanchart for the purpose and was hoping to close the deal
in three to four months.
Also, the Sterling group has committed an investment of $ 50 crore ($
500 million) for expansion. The company is looking at 15 to 20 per
cent of equity dilution.
Management control would remain with the Sterling group. Sterling
nfoTech holds 100 per cent of Barista Coffee Company.
The dilution is aimed at growing the coffee chain faster. Currently,
Barista is in the process of putting the information memorandum
together.
Apart from adding outlets, the expansion plans include implementing
SAP and supply chain management.












CONCLUSION

Established in February 2000, Barista Lavazza is noted as a
pioneer of ndian caf culture. The Barista Lavazza chain of espresso
bars delivers a truly talian coffee experience in warm, friendly and
relaxed environment. t aims to provide a comfortable place for
people to unwind over interesting conversations and a cup of coffee.
Barista Lavazza consist of young adults, who are exposed to global
lifestyles and appreciate the authentic flavours and tastes of coffee.
At last count, the Barista Coffee Company Limited has over 200
Barista Lavazza Espresso Bars and Barista Lavazza Crmes in over
30 cities across ndia.
Besides the ndian sub-continent, Barista Lavazza also has
cafes in locations across Sri Lanka, Oman and the UAE. Barista is
owned by Lavazza, taly's largest coffee company. Lavazza, the sixth
largest coffee roaster in the world, has a 46.5% share in the talian
retail market (value, source: Nielsen) and operates in over 80
countries in the Home and Away-from-Home sectors (Foodservice,
Vending and Cafes).