Go to any of the mushrooming coffee bars and what do you find? The menu displays not just a range of coffees, but an ever increasing list of soft drink concoctions and other beverages mingling with snacks and mini-meals.
Strange? Maybe. With more than 500 coffee cafes in the country, up from 175 in 2002, coffee was the most happening beverage. And the players, from Barista Coffee Co to Bangalore-based Cafe Coffee Day, were opening outlets practically every weekend.
So far so good. Today, at Barista Coffee Co, coffee sales are much less than its other offerings.
Sixty per cent of its sales are brewed from teas, smoothies, food items and merchandise. At Bangalore-headquartered Cafe Coffee Day, 70 per cent of its sales come from beverages including coffee. At Cafe Mocha, coffee sales are up from 3 per cent three years ago when it first started to 17 per cent today.
What does all this mean? Coffee sales have not really stirred the storm they were expected to be. But this has not deterred the coffee cafes from stretching their brands.
Internationally, coffee sales are virtually stagnant, moving ahead at 0.5 per cent. According to a 2005 research report by the United Nations Food and Agriculture Organisation, India's coffee consumption has been chugging along at 2.2 per cent per annum.
With consumption pegged at 70,000 tonnes, branded coffee accounts for 53 per cent, unbranded 40 per cent, with cafes constituting 7 per cent. Industry estimates peg the annual growth rate of the coffee-house segment at a half per cent clip.
Despite these figures, if coffee houses are extending their network, according to Sunalini Menon, chief executive of CoffeeLab, which provides evaluative services for coffee manufacturers, it is because they provide more than just coffee.
"They are a venue to socialise, finalise business deals, conduct interviews, listen to music and read in," she says.
According to Cafe Mocha's CEO, Dharmesh Karmorkar, call centres have been one of the growth triggers. "Before the advent of night-time work enterprises, a coffee house's customer was limited to individuals who worked daytime hours. Now, in addition, we have an entire group of professionals who work a night-time shift."
There is also the issue of small town individuals moving away from their families to larger cities for career opportunities that were not present before.
"This individualistic culture promotes the need for a venue to socialise with others of their age who share their interests," he adds.
Barista's COO, Brotin Banerjee relies on the power of the youth and their increasing disposable income.
"Several Indian students begin working at a very young age, sometimes right after high school. They have the purchasing power," he says.
That's why with a Rs 20-crore (Rs 200 million) outlay, Barista is hoping to be an international brand. Plans underway include 35-40 Baristas in Nepal, Malaysia, Indonesia, Turkey, Iran and Bahrain.
Its strategy will centre around targeting college students in the age range of 16-20 to "catch them young" and induce "lifetime loyalty". Barista also plans to start "platforms on the go" in partnership with petroleum companies to cater to consumers travelling between cities.
Its current tally is 122 stores, which include Barista espresso bars, shop-in-shops and corner stores.
Also, from 230 stores, Cafe Coffee Day's senior general manager Sudipta Sengupta plans to add an additional 270 stores in the next three years.
"We will incorporate health foods like herb breads, sunflower seeds, multigrain breads and bran sandwiches. We will also introduce a premium coffee and offer merchandise such as filters, mugs, and message T-shirts," she says.
In a bid to take coffee to the masses, the new outlets will be in towns, which have a population of one lakh and above.
While Barista and Cafe Coffee day are targeting mass-based consumption, Cafe Mocha, with only nine franchise outlets, is focusing on imported coffees and an upmarket clientele.
It wants to push its stores from nine to 65 in the next three years. There are plans to open franchised stores in Indonesia, Singapore, Sri Lanka and two in the Middle East.
In addition, the chain plans to invest Rs 3 crore (Rs 30 million) in human resource development and Rs 8 crore (Rs 80 million) on the development of new menu items every year.
Explains Karmorkar, "We're focusing primarily on knowledge building and management and the expertise that our chefs and staff bring to the table."
Clearly, despite coffee consumption stagnating, coffee houses are finding it lucrative to add value activities -- book clubs, film clubs, social activities, merchandise, food -- as the main plug. Drink to that!
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