Shreyas Kulkarni

The per capita consumption of coffee in India is under 200g says Lavazza India's Jai Ganesh Ramnath

He talks about the CFDS that lets you order coffee via an app, why India still loves instant coffee, and how Lavazza India is coping with the pandemic.

Offices have reopened, employees are back at their seats, the work continues, and yet the distance has increased. The pandemic has changed the way offices operate forever. But, the coffee vending machine offers some semblance of normalcy in this atmosphere of chaos. If only. Thanks to the risk of infection, many employees will not even touch the machine to get their daily fix of caffeine. It's one of the many sacrifices we've made during the pandemic.

There's one company, however, that has a novel solution to this coffee conundrum. Lavazza, the Italian coffee brand, that supplies coffee to several offices is offering CFDS - Contact Free Dispensing System. It lets you order coffee through an app and has an inbuilt queuing system that helps maintain social distancing.

We caught up with Jai Ganesh Ramnath, MD and country head, Lavazza India to better understand this system, how the coffee company is dealing with the hit B2B revenue, among other things.

Edited Excerpts.

Tell us about the CFDS. How did it come to light?

While offices shut doors during the pandemic, some of our clients from the BFSI sector, IT space, and the pharma and manufacturing industries reopened in April and May under the Essential Services Act. While there was a need for hot beverages in their office vending machines, employees were scared or sceptical of pressing a button on them. This is where we thought about how we can make the best of the situation.

An employee could either scan a QR code or use a smartphone app to get coffee. If you're scanning a QR code, you'd need six or seven different codes for every product which would be confusing and the machine (on which the codes would be stuck) will look dirty. So we thought the best way to go about it is where you download an app, interact with the machine in a contactless manner, and choose the beverage you want.

It's available on the internet and intranet and employees can access the machine without sharing their mobile numbers or being asked for an OTP. There's also an inbuilt queuing system to ensure employees can maintain social distancing at the pantry.

Is this a new offering or is it available for existing Lavazza coffee machines?

This is a new offering and can probably be made available across. Lavazza has got its vending machines in offices, hotels, restaurants, cafes, hospitals.. across all B2B channels. At the moment, we see that there could be a demand for this largely from corporates because, in a hotel or a restaurant, you expect to be served at your table.

Are offices or Ho.Re.Ca your biggest B2B revenue earner and how are you coping with the shutdown of the latter?

In terms of the number of machines installed and the number of clients served in India, offices would be number one followed by hotels. The approach we have is that there is a pandemic and it has impacted us in the past five odd months. It could last for the next two-three months or till whenever it lasts but Lavazza as a brand has been there for 120 years and it will be there for the next 100 years. Therefore, as a business, we will look at the future.

We are looking at how to put out our course and training, how to better train our engineers in offering our services online, we're equipping more and more people with barista skills, coffee skills because this is the time when we train our people... Come November, December, January things are going to come back to normalcy i.e. People will return to hotels with or without (in case pandemic goes away) a mask. Therefore, we are getting ready for that future wherein we will serve our customers better more hygienically and with more knowledge.

Your take on India's coffee culture

India as a country is pretty nascent as far as coffee is concerned. The per capita consumption of coffee is under 200g and whatever coffee India grows, some of the best in the world, two-thirds are exported and only one fourth is consumed in India.

Despite having a great culture of growing coffee in the Coorgs and the Keralas and despite the millenials loving coffee like never before, people still don't know the basics of coffee, how to consume it so B2B is a very important tool for us to keep on educating tomorrow's consumer about to how to appreciate coffee.

Therefore, we (Lavazza) believe in giving a very good consistent cup of beverage each time say for breakfast so that a customer is compelled to buy a good brand of coffee while going back home and that brand can be Lavazza or anything else. We are doing this for the Indian coffee industry so that we don't export fine coffees to other parts of the world and start consuming what we are brewing.

Beans or ground, what's selling?

I'd rather people bought beans because then they're going to do the entire act of grinding the beans every morning and preparing their cup. But, the penetration of beans in an Indian household is very minimal.

Before the pandemic, we were selling our coffee in stores like Nature's Basket or a Foodhall and we were also present on e-commerce sites like BigBasket and Amazon, but ever since the pandemic broke, we've experienced growth in multiple people buying coffees online. It's three times the number of people buying online than they did before. Today, people continue to buy coffee powder predominantly online and there aren't much of bean takers online, although, in global markets, a lot of people buy beans to cup machines.

India is still an instant coffee market. It is in the north and the west but in the south, it's a filter coffee market and consumed with an additive called chicory. The market for pure coffee, whether instant or pure filter coffee, is pretty limited.

Are you seeing a change in the type of consumers?

There is a change in the consumer profile because, before the pandemic, we had certain categories of people shopping on Amazon for the sake of convenience than anything else and a different kind of people shopping in Nature's Basket and Foodhalls.

If I look at the trends now, sales have increased in the offline retail stores, but it has increased multifold on e-commerce. On a scale of 100, sales have risen by 25 points in section A (offline stories) and by 300 points in section B (e-commerce sites). More and more new customers are coming online.

Are these new customers going for premium products? Yes. We're also seeing good consumption for our coffees made in India as well. Coffee earlier was a luxury but now that everybody is working from home, it has become a need and people are opening their purses, buying what they'd usually not, and they're interested in imported coffees as well as the ones roasted in India.

What can you tell us about your marketing strategy going forward?

We've largely been a B2B player. All our marketing spends are focused on specific marketing programs for big hotel banners, for chefs, for a Sunday brunch... All our spends even before the pandemic were on a customer who goes to a particular hotel or cafe. We never exposed to traditional forms of marketing or advertising because we were never in that space. Even now, you would see us focus on select stories on LinkedIn or our official Instagram page and with its popular influencers. After the pandemic, you would see us focus on niche digital marketing campaigns aimed at giving a specific consumer experience.