Barista is looking to exit the business even as India’s $230-million annual coffee through cafes market is set to swell to $410 million by 2017. (Pic: BCCL)
NEW DELHI: Italian coffee retailer Luigi Lavazza has brought in an executive from its home operations to restructure its India business and stem losses even as it scouts for a buyer for Barista coffee chain. Omar Nasrollah, who was Lavazza's business development manager in Turin, took over as the managing director for India earlier this month.
Having come here with a clear mandate to restructure the loss-making venture, Nasrollah has already cracked the whip and has already eased out three of the firm's top executives, two people with direct knowledge of the situation said. An e-mail query sent to Lavazza through its external public relation firm on Friday last did not elicit any response till late on Wednesday.
Nasrollah has been visiting India for months in preparation to take charge of the operations. ET had reported in November that Lavazza has hired a New Delhi boutique investment firm with the mandate to scout either for strategic investor or an outright buyer for Barista. Preliminary talks were held with potential buyers but the negotiations did not move forward due to the valuation issues, one of the persons quoted earlier said.
He said Lavazza plans to focus on profit making Fresh & Honest and wants to dispose off Barista whose losses eventually eroded profits made by the coffee vending machine business. In 2007, Lavazza purchased Barista coffee chain and coffee vendor retailer Fresh & Honest from serial entrepreneur C Sivasankaran's Sterling Infotech for $125 million.
Barista is looking to exit the business even as India's $230-million annual coffee through cafes market is set to swell to $410 million by 2017 as the country would add 1,000 more coffee bars to its existing number of about 2,000 outlets, according to retail consultancy Technopak Advisors.
Late last year, Starbucks Coffee Co made its India debut in an equal partnership with the Tata Global Beverages and the alliance is planning to open dozens of stores in the coming years. Starbucks entry came close on the heels of another US coffee giant Dunkin Donuts that rolled out its stores in India in May last year.
A pioneer in coffee cafe culture in India in the 2000s, Barista fell behind when competition from market leader Cafe Coffee Day and UKbased Costa Coffee intensified. Analysts blame successive change in its ownerships as one of the main reasons for loosing focus of the market, eventually leading to its current heavy loss-making situation. Barista has changed hands three times since its inception.