Bangalore: Coffee chain Barista Coffee Co. said on Monday its March acquisition by Luigi Lavazza SpA had given the company stability that would help it expand both within and outside India.
Prior to the acquisition, Barista had seen four management changes in the past five years.
Lavazza, Italy’s biggest coffee roaster, acquired the company and associate Fresh & Honest Café Ltd for Rs480 crore from Sterling Infotech Group, a Chennai-based company promoted by non-resident Indian C. Sivasankaran.
According to Barista chief executive Partha Dattagupta, Lavazza will invest Rs105 crore in the Indian café chain in the next two years. Barista, which currently has 175 outlets, intends to have 210-220 cafés across India by 31 March. Subsequently, it will add 100 new outlets every year, said Dattagupta.
“For Lavazza, India is a strategic market... Barista has been in the café business for a long time and understands retailing, vending and café business well. We hope to leverage Lavazza’s international experience,” he added.
Outside India, Barista has nine outlets in the United Arab Emirates, two in Oman and five in Sri Lanka. It plans to increase this number to 20 by March.
Barista, which now operates mainly in metros and other large cities also plans to extend its reach to smaller cities. The company will adopt a three-tier pricing strategy depending on the location of the outlet, Dattagupta said.
“Prices at our Meerut (a town near New Delhi) outlets will be lower by as much as 20% compared with those in New Delhi,” he added.
The company is looking at setting up cafés along the highways, but will refrain from the kiosks—small coffee dispensing outlets—business.
Meanwhile, Dattagupta said Fresh & Honest is keen on aggressively expanding its vending business in India.
According to Coffee Board, a government body, coffee retailing is witnessing a boom in the country and is estimated to grow by about 30-40%.
Dattagupta said higher disposable income, the growing need for a place “to hang out”, and adoption of Western lifestyle were leading to growth of café chains. However, he added that rising real estate rates and delays in execution of projects were a cause for concern.
Barista is the second largest café chain in the country after Café Coffee Day, which has 483 outlets.