Coffee Day Group, which runs India’s largest chain of coffee bars, is looking at a massive expansion in the food processing sector. The Group which owns expansive coffee estates in Chikmagalur district of the pristine Western Ghats already has a sizeable presence in banana cultivation and which is being processed.
Senior company officials told Business Standard that the company is actively exploring other fruits and vegetables which can be grown in large volumes, processed and exported in addition to catering to domestic consumption.
This move by Coffee Day Group to diversify into food processing, follows a series of measures which will take Coffee Day Group, from a coffee bean exporter & retailer to a diversified entity straddling – hospitality, logistics, furniture, financial services, granites, waste management and commercial realty development.
The Coffee Day Group recently acquired control of Sical Logistics, enabling backward integration for a range of its activities besides also for third party logistics.
Company officials further detailed that around Rs 200 crore has been earmarked for food processing initiatives and plans are being rolled aggressively to tap the market which has significant potential.
Coffee Day Group with this diversification will be taking on the established players like Avantha Group, which has a significant presence in the gherkins exports, besides other players including Karuturi Global which is starting to expand its presence in this segment.
Coffee Day Group is entering this sector when it is growing at an healthy 14% annually and a market which is now worth Rs 3,50,000 crore.
Even as this foray is being strategized, Coffee Day Group is pushing ahead with its plans for a strong presence in the furniture segment. According to industry information, Coffee Day Group is looking to build on IKEA model.
Much of Ikea’s furniture is designed to be assembled by the consumer rather than being sold pre-assembled, which reduces the costs substantially. Industry information indicates that Coffee Day Group has leased land banks in Guyana to source wood for this foray. The furniture business of this group already has a captive base in the 1,000 odd cafes run by Café Coffee Day. The company also recently signed a pact with Future Group to retail some range of furniture.
Coffee Day Group has been aggresively rolling out initiatives across a range of its businesses ever since it raised Rs 1,200 crore through three marquee private equity investors - Standard Chartered Private Equity, KKR and New Silk Route. While the company is planning strategic diversifications, it is also consolidating its presence in the flagship coffee retailing business and is looking at opening around 350 cafes during this year, taking the number close to 1,500 during CY11.
It is also understood that Cafe Coffee Day, which has grown by sheer word of mouth and has hardly advertised, is looking at coming out with a television commercial shortly.
