U.K-based Costa Coffee top executive Andy Marshall has attributed the coffee chain’s slow pace of growth in India to the difficulty in building local supply chains and forging partnerships.
The company, which entered the Indian market in the 2005, still remains very much a ‘new challenger’ brand, according to Mr. Marshall.
“Domestic sourcing and building up the network here is a pain. By this, I mean being able to certify quality and so on. I could use expletives to describe how hard it has been. It’s very difficult process to source and thereby become less dependent on imports,” said Mr. Marshall, who is the Chief Operating Officer, International, Whitbread, which owns the Costa brand.
Acknowledging that the company’s pace of growth was ‘slower than expected’, Mr. Marshall pointed to the fact that they wanted a firm foundation, rather than growing without profit.
“The last three years have gone into investing in this platform of local partners, from which we can springboard our growth. Though we are still a sub-Rs.100 crore brand, we have big plans,” he added.
Food retail major Devyani International, which is the master franchisee in India for Costa Coffee, is planning to invest nearly Rs. 200 crore over the next three years to increase the number of outlets to 300 from the present 106.
“We will focus on major cities first and then explore tier II cities. Our strategy is to first make sure the supply chain is in place and then settle in firmly. For Chennai, we will have three stores in three months and six by the end of the year,” said Santosh Unni, CEO, Costa Coffee India, while launching the chain’s first Chennai store.