Australia’s Coffee By Di Bella to raise $20 m to venture into new markets

Australia’s Coffee By Di Bella plans to approach private equity funds to raise $20 million to venture into overseas markets.

The rights to the brand outside Australia is owned by its Indian subsidiary, which plans to take the cafes to West Asia and Europe. India is the only country outside Australia where Coffee By Dibella has its cafes.

Speaking to BusinessLine , Rahul Leekha, Director, Coffee By Di Bella, said, “We are close to a valuation of ₹120 crore today and would be looking at raising $15-20 million from PE funds as we expand our operations in India and the overseas markets.’’

Leekha has picked up 80 per cent stake in the Indian subsidiary and the balance is owned by the chain’s owner in Australia, Philip Di Bella.

After entering the country in 2011, Coffee By Di Bella has had a tumultuous journey changing its local partner and shutting down outlets in cities like Hyderabad.

In the overseas markets, Coffee By Di Bella would be taking its cafes to places like Dubai and Qatar and has ambitious plans to enter the UK market. “The UK is a high volume market compared to India. But there will be more competition with big players like Costa, Starbucks and Caribou in this market. The food culture and formats are different in the overseas markets,’’ added Leekha.

In India, Di Bella’s only competitor right now is Starbucks since most of the others like Costa, Barista, Gloria Jean, Coffee Bean & Tea Leaf have either exited or are winding down operations.

“Today only Starbucks, CCD and ourselves are in the organised coffee retail category which is estimated at ₹1,700 crore with a CAGR of 20 per cent. But CCD is for the mass market and so the only competitor for us is Starbucks,’’ he added.

Unlike Starbuck’s fast pace of growth with 91 stores, Coffee By Dibella has been conservative with 15 stores, which it plans to take up to 20 by the end of the year, and claims to be a profitable venture in India.

“We make sure that each store keeps its rental costs at 15 per cent of the turnover and is profitable before opening a new one. Today, our profits are in excess of ₹10 crore as we make sure the ROI directly fits the sales of every outlet,’’ he claimed.

With a average ticket size of ₹500, coffee comprises about 40 per cent of its sales while the food is outsourced from players like Ambassador Kitchen. “We source our coffees not only from Australia but from plantations in India. Now are are planing to launch Indian blends with names like Monsoon Malabar to suit the Indian palate. Apart from coffee, we are follow a heat and eat model,’’ he added.

With a target to reach sales turnover of ₹100 crore next year, the coffee chain is hopeful of raising money in the near future.

“In the coffee retail space, there are not too many chains that are profitable and PE funds are seeking profitable and scalable models. We would be getting a market valuation done by big firms like KPMG or EY when we raise money from PE firms next year,’’ he added.

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