Full of beans

EVEN AS THE BATTLE for coffee chain supremacy in India intensifies with the entry of Starbucks, Indian coffee chain Brewberrys has built itself a niche. Focussing on small towns and corporate cafés, with 122 stores across the country, what started as a single café in Vadodara, Gujarat, in 2008, is today one of the fastest-growing chains in India. There are 40 franchise stores, five company-owned ones, and kiosks at all 77 Passport Seva Kendras.

“The scope for such chains is huge,” says Harish Bijoor, CEO, Harish Bijoor Consults, and former vice president, Tata Coffee. “A study we conducted in October founda the Indian market can support 6,100 cafés, but has just 2,217, including the Starbucks outlet in Mumbai’s Horniman Circle.” A Euromonitor representative says that sales from specialist coffee shops will touch Rs 2,704 crore by 2016.

Started by Ankur Gupta and Ronak Kapatel, both aged 28, with hotel management backgrounds, Brewberrys opened its first store with an investment of Rs 10 lakh from their families. With little capital to expand across the country, they chose the franchise route. FY13 turnover has already reached Rs 2 crore and is expected to touch Rs 4 crore. Revenue for FY12 was around Rs 70 lakh.

Brewberrys has opened in small towns such as Kohima in Nagaland, Hosur in Tamil Nadu, and Bhilai in Chhattisgarh. Gupta, founder and director, Brew Berrys Hospitality, the holding company for Brewberrys, says, “Being a startup, it’s very important that whatever we open is profitable and sustainable. Rentals are a big issue in metros and big cities. So we opened in places where we were sure of profits—where people are willing to spend and rents are manageable.” Even when they opened in Mumbai, it was in the low-rent campus of the Indian Institute of Technology.

While Café Coffee Day (CCD) has entered the premium cafés category with The Lounge, where a regular-sized cup of cappuccino costs Rs 90, Gupta says he wants to stick to neighbourhood and corporate cafés. “We want people to come to our shops more often than once a week or just when shopping.” For example, a cappuccino at a Brewberrys café costs Rs 40 to Rs 60 while at the Passport Seva Kendras and offices such as Jabong in Delhi, it costs between Rs 15 and Rs 25. At a neighbourhood CCD, it costs between Rs 58 and Rs 72. However, there’s competition from the 900 Coffee Day Xpress outlets in offices, tech parks, airports, and hospitals, where a coffee costs Rs 10 to Rs 20. K.Ramakrishnan, president marketing, Café Coffee Day, says these outlets are primarily in tier I markets.

Gupta and Kapatel now plan to open company-owned cafés. They’ve opened one in DLF’s Infinity Tower A in Gurgaon, and signed a deal with Mindspace in Hyderabad. Some private equity firms have shown interest. Also in the pipeline is an online merchandise portal, BrewShop, which will sell backpacks, T-shirts, mugs, and pens, as well as coffee beans and pre-mixes.