The soft drinks giant Coca-Cola has entered in exclusive talks to pick up significant stake in the country’s largest coffee chain Café Coffee Day (CCD). With this the Beverage maker is looking towards gaining a foothold in the rapidly growing cafés space and hedge risks associated with its core carbonated drinks business, two officials in knowledge of the development said.
As per reports, the talks are in early stages. “The potential stake acquisition is being driven by Coca Cola’s headquarters in Atlanta, and officials from the beverage maker’s global team are engaged in active talks with the Coffee Day management. It would give Coca-Cola significant scale in the fast-growing café business, compared to soft drinks,” one of the officials mentioned above said.
“This news is absolutely speculative in nature and as a matter of company policy, we do not have any comments to offer at this point in time,” a Coca-Cola spokesperson said.
Café Coffee Day, promoted by V.G. Siddhartha is owned by Coffee Day Global, a subsidiary of Coffee Day Enterprises. With a footprint of 1,750 cafes, CCD continues to be the market leader in the organised café space and competes head-on with Starbucks and smaller coffee chains such as Barista and Costa Coffee.
Due to rising debt and competition from café chains and tea cafes such as Chaayos and Chai Point, CCD’s expansion plans have slowed down over the past two years. Around 90 small format stores of CCD had shut down in FY18.
Coffee Day Enterprises reported net sales of Rs 76.9 crore for the quarter ended March 2019, up 43.64% year-on-year. The café chain’s quarterly net losses stood at Rs 22.28 crore the quarter, compared to Rs 16.52 crore in corresponding year-ago quarter. It has been reporting same store sales of 10-11% over the past three quarters.
Coca-Cola has begun preliminary talks for a substantial stake buy in CCD after 10 months it had acquired UK coffee chain Costa Coffee from parent company Whitbread PLC for $5.1 billion.
(With inputs from The Economic Times)
