Nestle finally has a serious contender to its Nescafe coffee dispensing business. In a bid to dig deeper into the coffee market Chimayo Chains Pvt Ltd (CCPL) - which is the master franchisee of Qwiky's Corporation Inc, US - yesterday announced the national launch of a new venture, Aroma Gourmet. This venture will sell instant coffee through the automatic vending machines that will serve both hot cappuccino and cold coffee.
This is the first time that a sustained attempt is being made at a mass-market level to market specialty coffee. To aid this mass effort, CCPL has tied up with a Bangalore-based outfit that will manufacture the vending machines in India on the basis of the specifications from the US partner. Currently, the company will offer only hot cappuccino and cold gourmet coffee. It plans to eventually extend this to snow coffee as well as eight more flavours such as hazelnut, mocha etc.
According to Sashi Chimala, founder and chief executive officer, CCPL, the company chose to brand this venture differently because it does not want consumers to get confused between the two offerings. "Qwiky's represents a lifestyle, and offers the proposition of freshly brewed coffee as opposed to instant coffee. We take great care to offer only small nitrogen-sealed packs to our outlets, which, in turn, grind the beans only when the order is received from the customer. Our new offering seeks to offer instant coffee to people on the go. At the same time, it offers us an opportunity to reach out to smaller towns with a viable business proposition in the form of an affordable investment option," he said.
Indeed. While setting up a Qwiky's Coffee Pub requires a minimum investment of Rs 45 lakh and a mandatory strategic location to provide lifestyle cues, Aroma Gourmet requires an investment of only Rs 2.5 lakh. The coffee vending machines, the coffee pre-filled cartridges are provided by the company.
To keep a tab on quality, the CCPL vending machines have a remote device wherein the service provider can keep track of the amount of coffee used per serving. Its 'Digital Dispensing System' (which is patented), provides precision temperature control, and regulates the whip speed and pre-mix dosage.
These machines are priced at Rs 18,000 (for hot coffee) and Rs 35,000 (for hot and cold
coffee). The company has also appointed a separate team that will spearhead the Aroma Gourmet business, which will be headed by Oswin Jones.
The launch of Aroma Gourmet stems from the organisation's research as well as the Coffee Board's findings that the instant coffee market is growing faster and had overtaken the filter coffee (or the freshly brewed coffee) market. Another interesting finding was that bulk of the instant coffee consumers was in the 25-30 age group.
The company admitted that its current venture had the potential to actually overtake the Qwiky's Coffee Pub business in terms of its revenue earning capacity. The company has set itself a target of selling 5,000 machines in the first year. CCPL's turnover stands at Rs 5 crore currently, which it hopes to double next year to Rs 10 crore.
The company plans to let the retailer decide what would be the final selling price per cup of coffee. The company said that the retailers could get their return on investment if they sold 35 cups per day and make good profits over and above that at even 50 cups. It hopes to market this at railway stations and cyber cafés among other places. CCPL has appointed two distributors already.
On last count, there were only around 180 'specialty' coffee outlets in the country that primarily belong to the three major coffee chains - namely Qwiky's, Barista and Coffee Day. As opposed to this, there are 40,000 such outlets in the US, 100,000 each in
Italy and Japan. Hence, Chimala feels the market in India is yet to be fully tapped. Â© 2002 agencyfaqs!First Published : February 27, 2002