Coffee exporter CCL Products enters domestic cafe segment

Aiming to be part of the growing cafe culture in the country, India’s largest coffee exporter CCL Products (India) Ltd has entered the domestic food and beverage business and has set up three cafes in Hyderabad recently on a pilot basis.

“The cafes are small format with some 15-20 seater capacity and largely for takeaways,” said Praveen Jaipuriar, CEO, CCL Products. “We will see for six months to a year to get the proof of concept (POC) and once that’s done we will kind of see how to scale this up,” he said.

In India, where the cafe culture has picked up in the recent years, Jaipuriar said the whole out-of-home consumption needs to be little more penetrative. “Now it’s a little more focussed on catering to the upper segment. So we thought that we can get into more affordable pricing and create a cafe for that. So that’s the experiment we are doing and doing it at three places: one at an office park, a high street and a mall to see what kind of response you get with this kind of an approach,” he said.

Set up by the Continental Coffee, the subsidiary of CCL Products, the cafes are called Contico. Once the POC is validated, the company may look at a franchisee model or may go on its own to expand the cafe business. Also, the company has the option to get a strategic investor on board to expand to other cities, go to both tier-I, tier-II, he said.

The Contico cafes will offer a good mix of Indian and western food, which is being outsourced from Compass, an international cloud kitchen. “Also at times the food is a little fusion as well, but yeah, the whole idea is how can we make coffee drinking a more pleasurable and a more affable experience,” Jaipuriar said.

CCL Products may look at scaling its cafe business over the next six months to one year time frame, depending on how its pilot shapes up. CCL is the third largest player in the domestic coffee market after Nestle and Hindustan Unilever, with close to 3 per cent market share across the country. Last year, CCL achieved achieved a turnover of ₹200 crore in the domestic business.

18% growth in June quarter

“We are likely to grow at 40-50 per cent this year and maybe close on to ₹300 crore, so that’s a pretty good run for a branded business in five-seven years time,” Jaipuriar said. CCL Products, largely a B2B company, started focussing on the B2C segment only in the past six to seven years.

For the April-June quarter, CCL Products reported a 18 per cent growth in revenues at ₹773 crore over the same period last year’s ₹654.9 crore. Net profits for the quarter were up 18 per cent at ₹71.4 crore over ₹60.71 crore a year ago.