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Costa Coffee gains modest ground in India as competition heats up

Devyani International has opened 14 new Costa Coffee stores in India in the last quarter, but faces growing competition from international brands in India’s fast-developing branded coffee shop market

Devyani International Limited opened 14 new Costa Coffee stores during the last quarter to reach 69 outlets in India | Photo credit: Devyani International Limited


 

Costa Coffee has achieved modest outlet growth in India over the last quarter as the country recovers from Covid-19 and international chains step up outlet expansion. 


Devyani International Limited (DIL), franchise operator of the UK-based chain in India since 2005, opened 14 new Costa Coffee stores during the last quarter to reach 69 outlets.


A five-year extension of the partnership was announced in August 2021. However, the growth of international brands, alongside revival of domestic chain Café Coffee Day and a premium segment, means Costa Coffee faces growing competition in India.  


The UK-based chain has faced competition in India by US chain Starbucks since the Seattle-based company entered the country in 2012. Starbucks now operates more than 260 stores across the country.  


Costa Coffee is also set to encounter fresh competition from UK coffee and food-to-go chain Pret A Manger, which is planning to open 100 stores in India by 2028 as part of an agreement with franchise partner Reliance Brands Limited. Canadian coffee chain, Tim Hortons, also has an ambitious target to open more than 250 stores in the country over the same period. 


DIL said that this was the first quarter without any Covid-related disruptions to its business, which enabled revenue growth of Rs. 7,047 million ($88m) for the quarter ended 30 June 2022. 


The operator cited the ‘buoyant contribution’ of its other franchised brands KFC and Pizza Hut during the quarter, at Rs. 425 Cr ($53m) and Rs. 165 Cr ($20m) respectively, but provided no specific detail for Costa Coffee’s financial performance. 


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