Tata Consumer Intends to Buy Cafe Coffee Day Retail Outlet's Stakes


Tata Consumer Intends to Buy Cafe Coffee Day Retail Outlet's Stakes

Indian multinational consumer goods company, Tata Consumer Products (TCPL) is planning to buy a strategic stake in Café Coffee Day’s retail outlets. The brand eyeing the Café Coffee Day’s stake mainly because the retail outlets provide synergy with its branded tea and coffee businesses that include Tata Starbucks as well.

According to sources, the Tata group is eyeing CCD’s complete portfolio that includes plantations, outlets, and vending business for synergies and more. But, there are certain legal complexities emerging due to the prior CCD promoter’s debt and deals post his sudden demise.

There are various possibilities in the portfolio, but how much of it actually works for Tata Consumer, given the legal complexities, has to be evaluated.

Furthermore, the analysts believe that the partnership with CCD’s outlets would enable Tata Starbucks to access both the premium and mass coffee and tea retailing platform. Additionally, Tata Starbucks is an equal joint venture between the Tata Consumer and Starbucks Corporation has reported a growth of 21 percent in FY20, and has about 185 stores across 11 Indian cities.

Although, CCD is also taking into account the strategic and financial partnership for its coffee retailing stores under the Café Coffee Day business as a part of its complete restructuring exercise, alongside to its vending machine business.

 According to the ET report, CCD has set up prices for the vending machine business to about 2,000 crore. Thus, the TCOL is expected to offer 1,000 crore. The café has around 60,000 vending machines throughout the captive markets that include malls, schools, colleges, offices, and other public places.

The investigation of the alleged suicide case of VG Siddhartha, promoter of the Coffee Day Group has unveiled that about 3,535 crore has been drained from the company by the entrepreneur’s personal firm. Also, the café is paring its debt of about 7,200 crore by selling assets. Further, its debt burden has been cut down to 3, 200 crore and is also expected to drop.