Financial Daily from THE HINDU group of publications
Thursday, Nov 27, 2003
Channels and Franchises
Corporate - Alliances & Joint Ventures
Coffee Day ties up with GSK to distribute new brand
Ms Ruchita Prasad, Kannada film actress, and Mr Venu Madhav, Business Head, Amalgamated Bean Coffee Trading Co.Ltd, at the launch of Coffee Day Perfect in Chennai on Wednesday. -- Bijoy Ghosh
Chennai , Nov. 26
COFFEE Day FMCG, a division of Amalgamated Bean Coffee Trading Co Ltd (ABC), has sewn up a distribution arrangement in Tamil Nadu with GlaxoSmithkline Consumer Healthcare Ltd, makers of the Horlicks and Boost brands.
The tie-up, on a test basis in the State, is to take Coffee Day's new packaged coffee brand Coffee Day Perfect to 50,000 retail outlets across 120 towns in TN that GSK Consumer caters to.
Mr Prem Kumar, General Manager, GSK Consumer, told newspersons today that this was a mutually beneficial arrangement for the two companies as Coffee Day would get the advantage of the deep penetration of GSK's distribution into TN towns while for the latter it meant a greater basket of products that it can offer a retailer as part of its portfolio of brands.
However, neither Mr Prem Kumar nor Mr Venu Madhav, Business Head, ABC, were willing to disclose the nature of the revenue-sharing of the distribution arrangement for "competitive reasons".
If successful in TN, the arrangement could be extended to other States, said Mr Prem Kumar. GSK, a big player in malted food drinks, is not present in the coffee category.
Mr Madhav said that packaged coffee was the only segment in the Rs 250-crore ABC's retail portfolio where it was not present. Launched in 1996 under the Coffee Day brand, ABC has forayed into different segments with Café Coffee Day (a café chain), Coffee Day Express (retail fast food outlets), Coffee Day takeaway (vending machines) and Fresh 'n Ground (coffee powder stores).
Coffee Day Perfect, a filter coffee brand in a 57 per cent coffee and 43 per cent chicory blend, is expected to fill the gap and take on brands such as HLL's Green Label and Tata Coffee's Coorg Coffee.
Elaborating on the filter coffee phenomenon in southern India, Mr Madhav said that of the 65,000 tonnes of coffee consumed in the country, around 20,000 tonnes is filter coffee. Almost 80 per cent of coffee consumption is in south India and Tamil Nadu alone accounts for 30 per cent of this.
In fact, he elaborated, there are over 600 brands of filter coffee available in the southern States alone. Segmenting the market further, Mr Madhav explained that roast and ground coffee powder or unpackaged coffee accounts for 44 per cent of the coffee segment and packaged coffee 56 per cent.
In the packaged coffee segment, filter coffee is the biggest chunk with 48 per cent while instant pure and mix coffee constitutes the rest. "That is the segment we are targeting with our Perfect brand," said Mr Madhav.
Perfect has been launched in four stock keeping units in the TN market - 50 gm (Rs 7), 100 gm (Rs 14), 200 gm (Rs 28), 500 gm (Rs 69).
The coffee has been sourced from ABC's own estates in Chikmagalur. The group, exporting over 25,000 tonnes of green coffee a year, is among the largest exporters of coffee from the country.
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