Private equity firms are leveraging the growing popularity of coffee across India. Even as Tata Starbucks stirs up a strong brew with two more stores set to open in Mumbai, taking its total count in the city to 11, an investor group has acquired stake in California-based Coffee Bean & Tea Leaf, aimed at supporting global expansion. The latter's chain of cafes has seen particularly strong growth in India.
While Tata Starbucks is a 50:50 joint venture between the American Starbucks Coffee Company and Tata Global Beverages, and currently operates 22 stores post its inception in October 2012, Pan India Food Solutions brought Coffee Bean & Tea Leaf (CB) to India in 2008, and has plans to expand to 40 outlets by the end of the year.
In India, private equity firm Everstone Capital controls Pan India Food Solutions that operates CB, which has outlets in Mumbai, Delhi, Kolkata and Hyderabad. Over the last seven years, numerous private equity investors have also partnered with Cafe Coffee Day. On September 12, private equity firm Advent International said it had teamed up with Asian partners to acquire a ‘significant’ stake in the parent of CB, a California café chain, with more than 900 stores in 30 countries. While Advent International joined Taiwan's CDIB Capital and Japan's Mirae Asset Private Equity to acquire a significant stake, the largest existing shareholder in the company, the Sassoon family, also participated in the deal. Financial details of the deal were not disclosed. Jaspal Singh Sabharwal, partner in Everstone Capital, said, “We have development rights for (CB) India. Pan India Food Solutions is the master franchise partner of CB, USA.”
In an earlier interaction, Sabharwal had spoken about the neat blend of ‘art, craft and science’ that was required to offer an international coffee experience to Indian consumers. Though it is important to study how brands differentiate themselves from each other, especially with so many foreign coffee brands in the country, and attempt to improve brand loyalty, Sabharwal said it hailed from a systematic detailed plan. “It is a fine blend of art, craft and science, especially in a business like food services. Most businesses in India need only art and science. In food, there is a lot of craft involved. In this business, one can't have rigidity. It is the ability to transform flexibility into opportunity. Food and fashion needs craft,” he said. On expansion, he added, “We invest when we see a right mix of a large market opportunity and the ability to scale the business within a short time.”
CB is buoyed by the response from the Indian market and is set to use science, art and craft to brew new plans.
amritanair.ghaswalla@thehindu.co.in