Coca-Cola in talks to pick stake in Cafe Coffee Day after pocketing Costa

Coca-Cola in talks to pick stake in Cafe Coffee Day after pocketing Costa

Mumbai, Jun 27: The world’s largest beverage company, Coca-Cola, has begun preliminary talks for a substantial stake buy in Cafe Coffee Day 10 months after it acquired UK-based Costa Coffee for $5.1 billion. The discussion with the Bengaluru-based company, promoted by VG Siddhartha, who exited information technology firm Mindtree earlier this year, is being led by the Atlanta office of the beverage major, persons in the know said.
T Krishnakumar, president and chief executive officer, Coca-Cola India and South West Asia, is currently in Atlanta and is involved in the negotiation, it is learnt. A Coca-Cola India spokesperson said the news about a possible acquisition was speculative in nature and that the company had no comment to offer at this stage. Cafe Coffee Day too declined to comment.
Coca-Cola has been looking to make inroads into the Rs 2,500-crore domestic coffee retail market in line with its global strategy of diversifying into non-carbonated drinks. While the Costa Coffee acquisition last year was intended to help the company do just that, an impediment has been the franchise agreement that Costa’s previous owner Whitbread had with billionaire-bottler Ravi Jaipuria in India.
Jaipuria’s Devyani International continues to run around 50 stores of Costa Coffee in the country, unable to work out a deal with Coca-Cola for his exit out of the franchise agreement. Jaipuria was not immediately available for comments on the matter. For Cafe Coffee Day, an acquisition by Coca-Cola will mean much-needed funds to reduce the debt on the books of parent Coffee Day Enterprises. Cafe Coffee Day is owned by Coffee Day Global, a subsidiary of Coffee Day Enterprises.