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Tata buys into fledgeling coffee bar chain Barista

Tata Coffee, Asia's largest coffee producer, on Wednesday acquired a strategic stake in a fast-growing, upmarket Indian coffee chain, which said it had rebuffed overtures from Starbucks Corp.

Tata Coffee, a unit of Tata Tea and part of the Tata group, one of India's largest conglomerates, said it had bought a 34.3 per cent stake in fledgeling Espresso coffee bar operator Barista Coffee Company.

Barista, established just over a year back, has created a splash in India's major cities with its Italian-style bars, which currently cater to 14,000 customers a day through 38 outlets across the country.

"Starbucks approached Barista for a stake, but we felt there were stronger synergies with Tata Coffee," said Barista's managing director Ravi Deol.

Seattle-based Starbucks is one of the fastest growing companies world-wide in the food and beverage industry. The coffee chain serves 15 million customers a week from 4,300 shops in 23 markets.

Barista harbours ambitions of branching out in a similar way from India, and thinks the tie-up with the Tata group could pave the way.

Barista, founded by the Delhi-based investor group Turner Morrison, plans to double the number of outlets to 76 by next March, the partners said.

Deol said Barista planned to open outlets in Southeast Asia, the Middle East, Eastern Europe and Africa by then.

Barista targeted sales of Rs 320 million for the year to March. The company expects to turn its first profit the following year as sales double to Rs 640 million, Deol said.

TETLEY'S NETWORK

Tata Coffee, owned 52 per cent by Tata Tea, paid Rs 260 million for the acquisition of a 34.3 per cent stake in Barista.

Tata Coffee chairman R K Krishna Kumar, who is also vice-chairman of Tata Tea, said Barista could leverage the international reach of Tetley Ltd, Tata Tea's British acquisition, as it moves to expand abroad.

Tetley has a marketing network in 35 countries.

"We acquired Tetley to go global, and we are now funding a brand in India hoping we can take it beyond the borders of this country," he said.

Tata Coffee produced 9.5 million kg of coffee in the past year of which it exported over 60 per cent.

The company owns about 15 per cent of India's coffee curing capacity.

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