Introduction
Coffee is the second largest commodity market and growth is expected to continue at a strong pace
for the foreseeable future. The specialty beverage industry is growing at an equally strong pace,
with sales growth in some categories projected to grow at rates of 40% per year. This growth offers
excellent opportunities for new companies to enter this market.
Existing coffee market size in Bangladesh is BDT 600 mn+. Contribution of brewed coffee is
almost two-third of the market while the instant coffee market counts for the rest of the market. At
present, there are more or less 50 premium coffee cafés in Bangladesh which happen to cater a
mammoth market of almost 160 mn+ consumers which clearly indicates that there is a huge
untapped market. Among these 50 cafés, 4 international chain coffee shops (Gloria Jean’s, North
End, Coffee World, and Barista Lavazza) currently operate in Bangladesh.
1
History
The café culture is very a recent phenomenon in Bangladesh’s history. Post-independence, there
were just a handful of places for eating out, while restaurants in general were just food serving
places. Local Chinese restaurants were the only popular places for eating out, family dining and
special events. In late 90s, fast food industry had a significant boom in Dhaka as well as other
major urban areas. People first got introduced to local pizza and fried chicken chains.
During and after 2000, the whole food industry flourished significantly. International restaurant
and fast food chains started opening outlets in the country. Dhaka, being the capital, experienced
the biggest transformation as many new restaurants and fast food shops have mushroomed,
catering to the palate of different consumer segments.
The industry witnessed an upward shift in demand over the last decade, with rapidly increasing
per capita income, changing consumer taste and altering lifestyle. Massive development in
electronic media introduced a complete cultural shift for the entire nation and like most other
service oriented industries; this industry also got a major revamp in terms of new consumer
generation, increased spending and improvement in consumer's taste and preferences which
resulted in tremendous growth in this industry introducing high end restaurants with specialization
in one or multiple cuisines followed by the introduction and the rise of the café culture in the
country and particularly in Dhaka as unprecedented number of cafés having sprouted up in the key
commercial and residential zones of the city. The traditional local tea stalls and canteens still
flourish beside these new coffee joints, suggesting that the rise in café culture has not stolen
business; rather it’s filling up a massive gap in the market.
2
This café culture is mainly triggered by the growing number of White Collar young professionals
and college and university going students. The young professionals like to go to all these cafés for
various reasons like business meetings, family hang out with or without children and catching up
with friends and colleagues; while the students prefer to go there for dating, hanging out with
friends and passing the time while browsing the internet and preparing assignments and
presentations. Other than these two groups, there are also people who are just looking for a nice
and warm cup of morning coffee that would make themselves ready for the day ahead or a strong
one to get refreshed after a day’s hard work while returning home.
The most triggering factor behind the rise of these phenomena has been the flexibility the
customers enjoy in a coffee shop like they can spend as much time as they want without being
asked to leave or make new orders. Moreover, the environment is vastly different and unique than
that of the restaurant environment. It is considered informal but comfortable and cozy. There are
also some cafés which offer Wi-Fi internet connection to the customers which is very much
convenient. Furthermore some cafés also broadcast live football or cricket matches which further
add to their attractiveness.
3
Market Analysis
Existing Coffee Market
Existing coffee market size in Bangladesh is worth BDT 600 mn+. Contribution of brewed coffee
is almost two-third of the market while the instant coffee market counts for the rest of the market.
Existing Competitors in the Market
If the proposed chain coffee shop is opened here in Bangladesh, it will face two types of
competitions: direct and indirect competition. At present, there are more or less 50 premium coffee
cafés in Bangladesh which happen to cater a mammoth market of almost 160 million consumers
which clearly indicates that there is a huge portion of the market still waiting to be exploited.
Among these 50 cafés, only 4 international chain coffee shops are currently operating along with
some local premium independent coffee cafés.
This figure below depicts the existing competition in premium café industry in Dhaka, Bangladesh:
4
When asked, Bangladeshi consumers ranked all these cafés in order of preference which is
displayed below:
5
As the industry is still very young and the consumption pattern is changing rapidly, people are
now looking for big brands. To understand this behavior, Light Castle Partners conducted a survey
in which coffee lovers were asked which big brands they want to see next in Bangladesh. And, as
expected, they ranked Starbucks as their first choice.
Company Overview
6
 Barista Lavazza:
Established in 2009, Barista Lavazza Bangladesh is noted as a pioneer of Indian café
culture in Bangladesh which delivers a truly Italian coffee experience in warm, friendly
and relaxed environment. It aims to provide a comfortable place for people to unwind over
interesting conversations and a cup of coffee. Barista Lavazza Bangladesh consist of young
adults, who are exposed to global lifestyles and appreciate the authentic flavours and tastes
of coffee. Currently there are 4 Barista Lavazza Cafe in Dhaka city and many more Kiosks
are coming very soon.
Besides Bangladesh, Barista Lavazza also has several cafes in locations across India, Sri
Lanka, Oman and the UAE. Barista is owned by Lavazza, Italy's largest coffee company.
Lavazza, the sixth largest coffee roaster in the world, has a 46.5% share in the Italian retail
market and operates in over 80 countries.
 Coffee World:
Coffee World, the global premium coffee chain is a subsidiary of Global Franchise
Architects (GFA). It made its entry to the Bangladesh market in 2005 with its local
franchise partner ETECETERA Bangladesh Pte Ltd. Coffee World is the first international
specialty coffee brand to expand through combination of corporate stores and a network of
single unit franchise. Currently, it has about 150 outlets all over the world.
7
Coffee World offers a wide range of premium hot and cold coffees followed by freshly
made complementary foods with an international flavor. Their menu includes favorites
such as waffles, cakes, sandwiches and fresh tossed salads. The café is well known for
having the best and the widest range of Frappes (an ice blended coffee or cream) in the
world. They are also famous for their waffles which are made fresh at their store daily.
At Coffee World, they take great care to provide their guests with the finest experience.
The coffee beans are carefully selected and roasted to perfection, their recipes are
developed with the highest quality ingredients, and baristas are extensively prepared to
serve a premium beverage for their consumer’s ultimate pleasure. During the Muslim holy
month of Ramadan every year Coffee World provides special Iftar Offers. In the Muslim
Holy month of Ramadan, Coffee World provides special Iftar Offers every year. Products
are offered at almost half the price for two hours starting from Iftar. Coffee World has their
outlets in several key locations of the capital such as Dhanmondi, Banani, Baridhara and
Uttara.
 Gloria Jean’s Coffee:
8
In 1996 Australian Businessman Nabi Saleh opened the first Gloria Jean’s Coffee store in
Miranda, Sydney with his business partner Peter Irvine. Gloria Jean’s has currently over
1000 coffee houses across 39 markets worldwide, including 400 in Australia alone. Gloria
Jean’s entered the Bangladesh market in October 2012 with a convenient location in
Gulshan 1.
Gloria Jean’s offers a range of espresso coffee drinks, cold drinks, blended and estate whole
bean coffees and specialty teas along with pastries and coffee accessories. Gloria Jean’s
coffee is committed in offering the world’s highest quality specialty coffee from its bean
to cup. It is well known for its dynamite baristas which gives the maximum coffee moments
and cappuccino kicks.
The environment and atmosphere at Gloria Jean’s is very coffee friendly where around 450
to 500 drinks are sipped each day. It is one of those places one can follow his/her favourite
author or work on his/her laptop in serenity. The staffs in the café are always offering their
warm smile and hospitality.
Around 450 to 500 drinks are sipped each day – be it the classics cappuccino, café latte,
espresso, macchiato; specialties Irish nut crème, white chocolate mocha; the classic hot
chocolate with marshmallow glace or the espresso and fruit chillers like Voltage or Mango
Gloria Jean’s specialize in brewing true coffee from honest and hand- picked beans. Their
9
menu changes quarterly, keeping the most popular items intact and one specific coffee
blend – hazelnut latte, which was not as popular initially but is a complete hit now.
 North End Coffee Roasters:
North End Coffee Roasters started its journey in 2011 in Dhaka by the Husband-Wife pair
of Rick and Christina Hubbard. The café originated from the famous Italian-American
“North End” of Boston and was first established in Pragati Sarani. North End offers
premium quality single-origin coffees from around the world with locally grown blends,
drawing years of experience in the industry. North End Coffee Roasters is a source of freshroasted coffee in Bangladesh where their coffee beans are an extensive selection from
Kenya, Guatemala, Costa Rica and Indonesia to name a few. In addition to that, North End
Café ensures that every blend of their coffee contains 20 percent local coffee beans
gathered from Chittagong Hill Tracts. The combination transforms them the exclusive
provider of local coffee with a perfect blend of traditional essence with a global to provide
the best coffee experience.
One of the core concepts in building North End was to strengthen the community and
Hubbard’s passion for coffee at the heart of things. In recent years coffee has become
something of a staple in the cafes of Dhaka but few among the hundreds of coffee houses
and cafes had the ability or knowledge to brew the perfect cup. In just six months after it
opened for business, North End in a bid to improve the products of other aspiring coffee
makers decided to provide advice and training.
10
In a separate individual survey North End was voted the best coffee in town by a huge
margin, with about 95 percent voters opting for North End. However, a big chunk of North
End’s charm seems to be fading in the new outlets of Lake Shore as the original North End
café situated in Badda is a respite for anyone looking for the authentic shop experience.
The off-center location offers a much quieter, relaxing feel where one can get some work
done or enjoy the company of friends, with the background smells and sounds of coffee
brewing
Factors that influence customers to visit a particular café
11
To better understand the existing rivalry in the market, we have conducted a primary research
which identifies the competitive edges and key factors that consumers consider while choosing a
café to visit. This graph lists all the factors that stimulate a particular consumer.
From the graph it is clear that the consumer base puts more weight age in the quality of the coffee
served along with the quality of service while other major percentage of them said that they look
for a nice and cozy café environment.
Location Analysis:
There are several locations in Bangladesh which are financially lucrative for setting up a café.
These include - Gulshan, Banani, Baridhara, Bashundhara, Bailey Road, Elephant Road,
Bashundhara City Shopping Complex, Jamuna Future Park, Dhanmondi, Uttara and Mirpur in the
capital city of Dhaka. Besides, all the 5 star hotels and resorts and airport lounge can be very good
options to set up coffee shops and vending machines.
For analyzing the attractiveness of each location, we have conducted a survey. The estimated
average basket size (spending per person) in selected food courts located in different locations are
presented in this chart.
12
Gulshan, Jamuna Future Park and Banani are among the highest revenue generating locations for
cafés as they are the most prime locations for attracting crowd and the foot traffic is very high.
All of the above areas are within walking distance of several leading universities, schools,
coaching centers and offices of many commercial institutions like banks, telecoms and real estate
developers. Since the coffee shops are primarily geared towards the students and young
professionals the ambience, drink and food variety will definitely contribute to increasing foot
traffic.
Consumer Insight:
Our primarily conducted research is to understand the consumers in Bangladesh café industry
which included the demographics, consumer behavior and demand patterns. The survey was
conducted based on a sample size of 60 people including students, young professionals,
homemakers and others. Important findings are discussed below.
 Demographics:
I.
Gender Profile: The majority of café goers are male (60%) while the percentage of
males in the total population of Bangladesh is only 49%. It is quite understandable
13
as the participation rate of males in total workforce is higher than their female
counterpart.
II.
Age Profile: This chart shows that most of the coffee consumers fall in the 19 – 25
years category most of which are young professionals and university students. They
usually go there for hanging out with friends and colleagues.
III.
Income Profile: People who go to most of these premium coffee shops usually have
high monthly income of above 50,000 BDT per month.
14
IV.
Occupational Profile: People who visit these coffee shops are mainly of three types.
Among them, young corporate professionals, university students and young
businessmen are the major customers who visit these premium café shops
frequently.
 Consumer Behavior:
I.
Favorite Hot Drink: In the survey it came out that most of the consumers who go
to cafés; prefer coffee to tea as a hot drink. And when it comes to the preparation
of coffee, they prefer Brewed Coffee instead of Instant Coffee.
Consumers who prefer brewed coffee to instant, like the Cappuccino the most are
followed by the Mocha and Latte. It shows that Bangladeshi consumers are not just
randomly picking up coffee type, rather they are picking up consciously
considering the taste and flavor as well.
15
II.
Why Coffee is Their Favorite: Most people favor coffee over other hot drinks
because of the perceived taste while majority of the rest of the consumers prefer it
because they find it more effective in helping them stay awake. That is a strong
reason that explains why young professionals are inclining to these coffee shops.
III.
Preferred Way of Having Coffee: Most of the consumers, who like coffee, prefer
to have it hot. However, there are some people who like to have it iced while said
that they like it both way.
16
IV.
Preferred Snacks with a Cup of Coffee: As an additional item, most of the
consumers order cookies or brownies. Sandwiches and cakes or muffins are also
among the favorite additional items. There are also a few consumers who like to
have scones, breads and salads with their coffee.
V.
Reasons for Visiting a Café: Consumers who go to cafés frequently admitted that
the main reason they go to a café is to hang out with friends. Second most popular
reason they disclosed is to hang out with spouse or date, followed by people who
go to a café for a business meeting. There is also demand for breakfast or afternoon
snacks in these cafes as well.
VI.
Frequency of a Visit: It’s interesting to see that there are so many coffee lovers in
the country. The number of people who visit a café at least once a week is the
highest. It indicates that the market has immense potential and is continuously
growing.
17
VII.
Preferred Accompanies: Most of the consumers love to hang out in a coffee joint
with their friends and spouses/dates. Some of them also love to be accompanied by
their colleagues and families as well.
18
Findings

Market coffee to specific consumption occasions: While innovators have readily developed
a range of coffee flavors suitable throughout the day, they need to be more clearly marketed
to specific meal or snack occasion. Suggestions include dessert-inspired sweet coffee
flavors and lightly roasted, sweet iced coffees.

Limited-time and seasonal menu items: These are the essence of beverage menu
innovation. While this isn't a new trend, it remains an important one. Limited-time and
seasonal offerings create a sense of anticipation and urgency. Restaurant operators are
conditioning customers to expect seasonal favorites, encouraging a shift in their "usual"
beverage choice. Limited-time offers allow operators to experiment with flavors and
formats that are trendy.

Sourcing offers opportunity for storytelling: Sourcing can play a significant role in coffee
beverage menu innovation with upside sales potential as a result of premium pricing. The
Coffee Bean & Tea Leaf, for example, is dedicated to sourcing, and features a variety of
single-origin coffee.

Customer loyalty: While single-origin coffee is no longer a novelty, it provides additional
room to not only help justify premium pricing but also incent customer interest and
knowledge. If the product delivers, both can sow the seeds of loyalty and return visits.

Local sourcing: It can also provide an interesting marketing opportunity. Local sourcing is
more prominent in marketing alcoholic beverages like wine, but there's opportunity for
coffee beverages to feature local roasting and to create blends and specialty drinks that play
to local preferences and pay homage to the community.
19
Conclusion
From our report we can come to a conclusion that it is becoming increasingly popular, especially
for today’s youth to hang out with their friends in café’s and have good refreshment. According to
our survey the peak hour for popular coffee houses are during the evening. Taste is still considered
the most important aspect of one’s coffee experience, while Cappuccino is the most preferred
drink.
According to our survey the most visited coffee shop is Gloria Jeans, although it is lagging behind
in terms of price. North End seems to edge ahead in terms of quality, taste, and authenticity of
coffee beans compared to the other two brands. Gloria Jean’s is one step ahead in terms of
decoration, location and being considered as a rich brand compared to others. The promotional
activities that Gloria does seems to have a wider reach because they constantly tries to stay
connected with their consumers in social media.
Coffee World is one the first famous coffee retail brands in Bangladesh to enter the market. This
should have been a big advantage for them, but over the years it has lost preference amongst the
consumers. Coffee World is struggling to compete with the international coffee retailers, they must
immediately adapt their business strategy to be in par with the current market competition and get
back their lost market share and mind share of their consumers.
Barista Lavazza has excellent brand name and brand visibility with huge young crowd as target
group. However, it is perceived as expensive brand. Threat from existing coffee chains and fast
food outlets are huge. So to tap the smaller towns/cities, they must introduce cheaper & unique
versions of coffee.
Beside these four major international brands, there are other famous market players who are able
to capture the mind share of the coffee lovers. Players like Tabaq, Melenge, Apon coffee shop and
many more has been able to create a buzz.
20
Recommendation
For Barista Lavazza:
Barista has an extremely strong brand image, but they need to work hard on improving their
customer perception of being and expensive brand. Barista and Café Coffee Day have almost
identical pricing, but Barista is still perceived as the more expensive brand. That is why our first
recommendation for Barista is, to carry out a promotion campaign to ensure that their target market
is well aware of their current low prices. This would help change customer perception and turn
Barista into an affordable brand. Another backlash of having such a strong traditional café brand
image is that customers have very high expectations of the taste & quality of products. Barista
needs to work hard at this aspect, especially for coffee and eatables products. Also Barista needs
to look at its coffee beans suppliers and coffee brewing process to ensure that it is the best it can
be. This is especially important considering the international expansion Barista is undertaking.
Barista should also look at the Taj, their national suppliers for eatables and desserts, and either
improve the taste & quality of eatable, or look at another supplier- because as of now, they are not
living up to expectations, and losing customers to Café Coffee Day. On a smaller note, Barista
delivery process should change, so that a café attendant delivers the coffee to the table. This may
seem insignificant, but it can go a long way in improving customer satisfaction.
For Gloria Jean’s:
Gloria has been able to capture the love and attention of the coffee lovers after entering the market
with a buzz. The strength it has in terms of location, decoration, and efficient promotional
activities, it should focus to hold to these values and try to strengthen more in these aspects. GJ is
considered as a rich brand, however this might be the reason that coffee lovers think that they
charge higher. Therefore, they should try to add more value to their offering so that their consumers
are satisfied with what they have to pay for the consumption they make. GJ should also try to
improve the quality of their coffee beans so that consumers can get the best coffee experience that
no other coffee shops can offer.
For Coffee World:
21
Being one of the first international coffee brands to enter Bangladesh it should have already reach
to a different level. However, overtime it lost its shine and pride. It should try to brand itself as
one of the first to enter the market. It should try to increase the quality of their coffee beans and
add more flavors to give a rich coffee experience to their consumers. They should also try to
promote with innovation and at a constant rate.
For North End:
In terms of quality of coffee beans served and taste there is no competition with North End, and
thus, they should try to empower themselves in these aspects and build its brand from there. They
do have a weakness in terms of location which they already tried to rectify by opening up new
outlets, but the other outlets seem to be of lower quality from the consumer’s perspective.
Therefore, in spite of opening up new outlets North End should not lose its originality, which is its
quality, its calm environment and being giving the best coffee shop experience to their consumers.
North End should also engage more to promote itself actively in social networks.
Overall, all the coffee shops there is in Bangladesh, how big or small they are, they should always
stick to their basic and grow its brand from there. How fancy their shop is, how attractive their
promotional activity is, will only give them success in the short run, but the most important aspect
is the taste or quality of coffee served. Everything else comes only after that. However, the current
market of coffee and especially retail branded shop is very competitive, therefore, each market
players should try to concentrate in value addition and continuously innovate and bring new and
interesting experiences for their consumers.
22