Coca-Cola is planning to buy a major share in the Bengaluru-based coffee chain Cafe Coffee Day. As per media reports, the soft drink giant has entered into talks with the coffee chain management for potential acquisition.
Cafe Coffee Day, a subsidiary of Coffee Day Enterprises promoted by VG Siddhartha, has a chain of 1,750 cafes. It is one of India's most organised coffee houses competing with Starbucks, Barista, and Costa Coffee.
CCD is seeing a slowdown due to rising debt and competition from smaller cafes. The lower sales and the high cost of maintenance have led to the piling of debt because of which the coffee brewing giant had to close down 90 outlets in the financial year 2018.
The coffee chain has been showing a static sale of about 11 percent for the last three years with quarterly net losses at about Rs 22.28 crore. Given the losses, the company had sold two CCD affiliated firms for Rs 3,200 crore to pay-off the accumulating debt. Siddhartha also had to sell off 20.32% of stake in software services firm Mindtree to Larsen and Toubro to reduce the company's debts.
Coca-Cola last year announced its acquisition of Costa Coffee which has about 50 stores in India. The coffee brand run by RJ Corp in India was bought off for about $5.1 billion last September.
The soft drinks giant is trying to step into the coffee business even as risks in the carbonated drink business have been rising.