Sunday, March 11, 2007

Lavazza eys on Barista

One more acquisition!! This time its that of the leading coffee chain in India by Italian coffee chain, Lavazza.

This all started with the visit of an official/ owner of Lavazza who visited a Barista outlet few weeks back and made his mind to take Barista in their international portfolio.

Italy's largest coffee company Lavazza is taking over Barista (Owner: NRI C Sivasankaran) and Fresh and Honest Café Ltd. (FHCL). The transaction would be completed over the next 4 weeks. With their plush looks, ambience and range of coffees, the two chains enjoy a mainly young clientele that Lavazza would inherit.

Lavazza’s entrance would preclude the US coffee major Starbucks that has been in talks with various companies for their foray into India. Lavazza owns the exclusive coffee chain Lavazza BLUE, and has a range of served as well as off the shelf products including Bevanda Bianca and Ciocolatto.

Barista has over 150 Espresso Bars and Barista ‘Crème’ outlets in over 29 locations in India. Besides India, Barista also has cafes in locations across Srilanka, Oman and the UAE.

FHCL operates in the freshly-brewed coffee vending business in India. FHCL has an installed base of 2500 Swiss, fully Automatic Vending Machines (AVMs) across the country. FHCL's client list includes 5-Star Hotels, high-end restaurants, large corporations, railway stations, airports & hospitals.

Both companies are owned by Sterling Infotech, that took over the operations from the Tata Group in December 2004, when Tatas exited their final 10 per cent stake in the company.
Commenting on the deal, Mr. Alberto Lavazza, CEO of Lavazza Group said : "We are delighted to enter the rapidly growing Indian market through Barista and FHCL. The acquisition allows us to take a leading position in coffee shops."

Lavazza has annual revenues of over $ 1.2 billion and operates in over 80 countries in both out of home (café chains and coffee vending) and retail businesses.

Few months back Barista added illy (new flavour from Italy) in their portfolio and now an Italian company is set to buy Barsita.

Now the point to understand here is that what value added will Lavazza make to the old sexy Barista. I am a loyal customer Barsita and spend around Rs. 1500 a month and wont make any difference to me Lavazza taking over Barista.

In past we use to have CCD and Barista and now we have recently seen the entry of Costa Coffee. And the Starbucks of world will be soon making a foray to India. Now the interesting question is whether we have this much consumer who will give business to these chains. Definately we have consumers varying from Tribes in Andaman & Nicobar Islands to the Hap crowd of Mumbai - a pure heterogenous market, but i am really doubtful of the number of consumers who spend Rs. 30 for a Cappachino cup of Coffee in Barsita, CCD or Barista.

Lets wait and watch and see whether these chains will actually be successful in India in short or long term. Best of Luck Lavazza!!


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