New Delhi: Carnation Hospitality Pvt. Ltd, a unit of packaging and food services company Rollatainers Ltd, has acquired a 100% stake in Indian coffee chain Barista Coffee Co. for an undisclosed amount.

Carnation will acquire some 190 Barista cafes in India, apart from acquiring its business in other countries such as the United Arab Emirates, Sri Lanka, Nepal, Bangladesh and Myanmar, where the chain has multiple outlets, Delhi-based Rollatainers said in a filing to BSE on Tuesday.

Carnation will also gain full management control at Barista, India’s oldest organized coffee chain that started operations in 2000 and was founded by Amit Judge of Kolkata-based Turner Morisson Ltd.

Stakes in the coffee chain have been sold several times. In 2001, Tata Coffee Ltd bought a 34.3% stake in the company, with C. Sivasankaran of Chennai-based Streling Infotech Group buying the remaining 65%.

In 2007, Italian coffee roasting company Lavazza bought Barista along with the Fresh and Honest coffee-vending machine business from Sivasankaran.

“Carnation now fully owns the Barista brand in India with no ongoing franchise or licensing obligations to Lavazza," Rollatainers Ltd said in a statement.

Sanjay Chhabra, director at Rollatainers, said Barista is a “powerful brand in the minds of consumers and high-quality pan-India operations from which to build on.... The long-term goal for Carnation will be to create a high growth, profitable food and beverage business."

Expansion at the cafe chain came to a standstill earlier this year, with Lavazza seeking to exit the coffee chain business altogether as it sought to grow its coffee roasting business in overseas markets such as India.

“The decision to move out of Barista has been taken accordingly with the global business guidelines of the group to no longer manage directly the coffee shop business," Antonio Baravalle, chief executive of Lavazza, said in a separate statement.

Instead, the company will continue to provide Lavazza coffee to Barista coffee chain thanks to a long-term supply agreement, in connection with a license agreement of the Lavazza trademark.

Lavazza added that it will continue to develop it’s coffee roasting business in India, a strategic market for the Italian company, where it operates it’s first and only production facility outside of Italy.

India’s coffee chain market is estimated at around $300 million with 3,100 cafes, and growing at 20% in value, according to an October 2013 report by consulting company Technopak Advisors.

Over the years, coffee chains such as Café Coffee Day, which has the largest number of outlets, American chain Starbucks, and European coffee chain Costa Coffee have played a key role in expanding the market.

However, cost structures for running coffee chains in India are still not conducive to profitability, an expert said.

“Given the cost component of expensive real estate, since most coffee chains chose premium locations for opening stores, coffee chains in India are yet to make economic sense. Ticket sizes are still limited (as compared to say fine dine restaurants) but cost components are very high in comparison," said Deep Mukherjee, senior director at India Ratings and Research, a unit of Fitch Ratings Inc.

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