Tatas set to get into pan-India coffee retail

After exiting the coffee retail business in December 2004, Tata Coffee is now considering a re-entry in to the business by setting up a café chain across the country.

The company, which sold its 34.3 per cent equity in Barista to NRI investor C Sivasankaran, is waiting for the non-compete contract it signed with Barista to expire.

“The non-compete agreement period ends next year and we will consider setting up a coffee bar chain then. We have not decided anything on the size and investment of the chain,” MH Ashraff, managing director of Tata Coffee told Business Standard.

Tata Coffee, Asia's largest coffee plantation company, is already running its branded coffee powder retail business through Mr Bean Coffee Junction.

Mr Bean outlets have been opened in Kochi and Coimbatore and the company is planning to launch three more, especially in Chennai and Pondicherry.

Mr Bean, neither a café nor a coffee outlet, is not a rival for Café Coffee Day or Barista or Cafe Mocha. There, the company provides an opportunity to buyers to blend different varieties of coffee power.

“For setting up a café chain of 100 outlets entails an investment of Rs 75-100 crore. The investment will vary according to the locations and the volume of business the company eyes. As the Tatas have not yet announced their coffee retail plan, it is difficult to say anything on their investments,” said Mumbai-based analysts.

Café Coffee Day, which opened its first cafe in 1996, today has the largest coffee bar chain in India with 650 cafes in 110 cities. Barista has over 100 espresso bars across India, Sri Lanka and West Asia.

In the last three years, domestic consumption of coffee has gone up steadily, with out-of-home consumption of coffee growing at a faster rate of 12-13 per cent. At present, India has a coffee consumption of nearly one lakh tonne a year, said industry officials.

In 2001, the Tatas bought stake in Barista from the Turner Morrison group for Rs 26 crore. After three years, they exited Barista after selling its stake to Sivasankaran’s Sterling Infotech reportedly for Rs 65 crore.

Sterling, which bought the remaining stake from Turner Morrison before, sold off the company to Italian Lavazza in 2007. Lavazza is now rapidly expanding the business across India.

Tata Coffee owns 19 coffee estates in South India. It produces 10,000 tonne of Arabica and Robusta coffees.