Barista Lavazza – Case StudyPresented by Valliappan P, Narahari Sai, Tejaswini

Introduction:

• Barista lavazza is a chain of espresso bars in India. Established in february 2000 under the name Barista, it was taken over by Lavazza in 2007.

• Barista Lavazza chain of espresso bars delivers a truly Italian coffee experience in warm, friendly and relaxed environment.

• A 34.3% equity stake was sold to Tata Coffee in 2001. C.Sivasankaran bought the remaining 65% in Barista from the Amit Judge-controlled tuner morrison in 2004 and his sterling group also bought out tata coffee’s stake later.

• In 2007, the sterling group sold Barista to Lavazza. Barista Lavazza is currently owned by Lavazza.

• The chain has 200 stores in India, with an estimated annual revenue of 200 crores.

• Barista was the fastest brand to make it on the list of super brands and is ranked among the top 50 phenomena that changed India

History

• BC850 : First known discovery of coffee berries

• 1600 : Coffee enters to Europe through the port of Venice

• 1654 : The first coffee house opens in Italy

• 1750 : One of Europe’s first Coffee house

• 1822 : Prototype of 1st espresso machine is created in France

• 1908 : Invention of the world’s 1st drip coffee maker

• Feb, 2000: First Barista Lavazza at Basant Lok, New Delhi

• Lavazza traces its origins back to 1895, when Luigi Lavazza purchased a little grocery store, Paissa Olivero, in the old commercial section of Turin for 26,000 Italian Lire, about US$ 20. In the early 1900's, he invented the concept of the blend - a complex art of mixing together coffee of different origins to obtain a distinctive taste and harmonious flavour in the cup. Before the turn of the century, the name Lavazza evolved into an international powerhouse and the unofficial ambassador of Italy, being synonymous with all things Italian - creativity, art, passion and of course, espresso.

Competitors

• Café Coffee Day

• Costa Coffe

About the case

• The case is about Barista Coffee Company which is facing problems regarding its performance in India.

• To overcome the hurdles and perform well the new CEO Yogesh Samat proposed some changes/priorities in this case.

• Changes/priorities are:

Change of strategy to consolidation instead of indiscriminate expansion.

Reorganization exercise at the coffee retail chain.

Increase the ratio of mall stores against standalones.

Opting for franchise to expand its operations.

Cost reduction at the operation level.

Including non-coffee beverages and speciality teas.

Change in pricing.

Customizing stores to suit localities

Co-promotions with movies and co-branding.

The Problems

Rapid expansion

Poor performance

Lack of focus

Poor selection of store locations

Lack of funds

Exodus of senior management personnel from Marketing and Finance

Case Study - Questions

Franchising a good strategy or not?

How do you grow while controlling the costs?