India’s Costa Coffee may brew cola wars

NEW DELHI: Coca-Cola Co., the American beverage maker that acquired the British company Costa Ltd for $5.1 billion on Friday, may have to look for a new partner to run Costa Coffee outlets in India.

Currently, the coffee chain in India is run by Devyani International Pvt. Ltd, a company of Ravi Jaipuria-owned RJ Corp. that also owns Varun Beverages Ltd which is also one of the largest bottling partners (globally) of PepsiCo Inc., the arch rival of Coca-Cola.

In India, Costa Coffee’s master franchisee is Devyani International, which also runs a bunch of quick service restaurants such as Pizza Hut, KFC, Vaango, Foodie’s Bar and a few other international brands in India. Costa Coffee entered the Indian market under an exclusive franchise agreement with Devyani International in 2005 and had about 100 outlets by 2013. But the company has been making losses.

During the fiscal year ended March 31, 2017, Devyani International shut down more than half the Costa outlets to bring down the store count to 46, according to the company’s latest filings with the Registrar of Companies (RoC). These outlets however make up just one percent of Costa’s total global store count. It noted that the company continued its focus on product innovation, cost optimization, technology upgradation, consumer connect and loyalty programmes to narrow down losses.