Because a lot can happen over coffee!
Soft drink giant Coca Cola is exploring the possibility of buying Coffee Day Enterprises Limited (CDEL) that operates the flagship CCD outlets across India. Business Standard reported that T Krishnakumar (Prez & CEO of Coca Cola for India & SouthWest Asia) was in the head office of Coke (in Atlanta, USA) last week to try and negotiate the deal.
Experts suggest that Coca Cola cannot use Costa Coffee for growth in India due to a feud with one of the local partners (that it wants to kick out) even though it acquired the UK based brand only 10 months ago.
Regardless of what brand it chooses to promote, this acquisition reflects the interest that soft-drink giants have developed for healthy-drink brands with customer preferences shifting towards health-conscious products.
In India, CCD is the Coffee King with more than 1750 stores. It is unrivalled in comparison to Barista (200), McCafe (186), Starbucks (146) & Costa Coffee (50).
While it is far ahead in the race and recording favorable growth, its debt may still be a factor that forces Coca Cola to pull back from the deal if it thinks that CCD cannot generate enough returns in comparison.
It’s going to be interesting to see how Mr. VG Siddhartha (founder of CCD) will react and pursue this as he recently sold his 20% stake in MindTree to L&T for ₹3000 Crores (that too for taking care of his debt).