- VG Siddhartha, founder Cafe Coffee Day is seeking a valuation between ₹8,000 to ₹10,000 crore for his coffee chain from Coca Cola.
- Chikkamagluru-based Coffee Day Enterprises in Asia is the largest producer of Arabica coffee beans.
As reported earlier, Coca Cola entered in talks with Cafe Coffee Day (CCD) for a stake in the Indian coffee giant.
VG Siddhartha, founder Cafe Coffee Day is seeking a valuation between ₹8,000 to ₹10,000 crore for his coffee chain from Coca Cola as reported by The Economic Times. It will peg the valuation of the coffee retailer close to three or four times of their sales, which is expected to close at about ₹2,250 crore for the year ending March 2020.
What Experts Say?
According to Experts opinion, Coca Cola is looking forward to this investment because an investment in CCD means access to retail outlets nationally. “CCD is the only pan-India coffee retail chain, the rest have not been able to scale to its level,” said Siddharth Khemka. He is head-retail research, Motilal Oswal Financial Services Ltd.
Khemka also said, “ With growing awareness among the consumers against the carbonated and aerated drinks, this will fit completely in the strategy of US-based beverage giant which looks to diversify its product and wants to move to the staple beverage market.
The Indian café segment will triple in the next decade even by a conservative estimate “going by the way the country is getting to be outdoor-consumption oriented”, said Brand consultant Harish Bijoor.
“There is social-ostracism in cola category, and that would be why Coke is looking for a footprint in the staple beverages market,” he added.
The monopoly of CCD in the Indian Market
Chikkamagluru-based Coffee Day Enterprises in Asia is the largest producer of Arabica coffee beans. It grows coffee on 20,000 acres of self-owned estates and set up the first cafe in 1996 in Bengaluru. It is internationally present in Vienna, the Czech Republic, Malaysia, Nepal, and Egypt.
According to a senior company executive, “The group’s coffee business expects to close the year ending March 2020 with sales of about Rs 2,250 crore”. It includes some exports of the bean, had revenue of Rs 1,777 crore and Rs 1,814 crore in the fiscal year 2018 and 2019, respectively, according to regulatory filings. CCD, set up in August 1996, has grown to include 1,750 stores across India with 60,000 vending machines.
What lies ahead?
With Coca-Cola acquiring Costa Coffee earlier this year, the plan is clear and simple. Coca-Cola plans to put its foothold on the market of special beverages. Cafe Coffee Day in India is well expanded. As one of the country’s largest individual coffee planters, Siddhartha heads a coffee plantation group with over 20,000 acres.
Coca-Cola plans to tap this growing market with their move in the premier coffee chain of India.
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