Café Coffee Day eyes overseas markets; plans 50 outlets in 2008

Caf Coffee Day eyes overseas markets; plans 50 outlets in 2008

Bangalore: It started with a single modern coffee outlet (or a café) in 1996 when Café Coffee Day launched what it says was India’s first such outlet, on Brigade Road, here.

Some 490 cafés later, including two each in Austria and Pakistan, India’s largest chain recently got valued at Rs2,400 crore.

Deutsche Bank AG and Templeton Darby International took a 10% stake in the retail division of Amalgamated Bean Coffee Trading Co. Ltd, the parent company of Coffee Day, for $95 million (Rs377.15 crore). However, since Amalgamated’s retail division has debts, the enterprise value is around $600 million.

Coffee Day is now gearing up to expand in overseas markets and is planning to launch at least 50 outlets in Austria, Pakistan and eastern Europe in 2008.

“In India, a cup of coffee would cost you from Rs30 to Rs45. In Europe, it comes for €1.5-2 (Rs88-117)," says Simran Sablok, general manager, marketing.

The company expects to invest Rs1.2-1.3 crore in each overseas outlet. Setting up a café in India typically costs about Rs55-75 lakh. The overseas outlets are expected to become profitable in four months, Sablok added.

Back in India, Coffee Day is slated to open its 500th cafe within two months and plans to have 1,000 cafés across India by 2009.

The expansion would be funded from the Rs380 crore-fund it raised recently by divesting the 10% stake. “We are not looking out to raise more money," says Sablok.

Coffee consumption in India is expected to touch 90,000 tonnes this year, compared with 85,000 tonnes last year, according to aCoffee Board official. India’s domestic branded and unbranded coffee market is worth Rs700 crore and isexpect to rise by 10% to15% year-on-year for the next five years, says Coffee Day’s Sablok.

Barista is the second biggest café chain in India with 175 outlets. The other players include Café Brio, Costa Coffee, Café World and Breads N’ More.