VF Franchise Consulting

Di Bella Coffee to launch India operations, again

Mar 5, 2014

Six months after severing ties with its local partner Sachin Sabharwal, Di Bella Coffee, one of Australia’s leading cafe chains, is set to re-launch operations in India.

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Phillip Di Bella, director of Espresso Enterprises (parent of the Queensland-headquartered Di Bellla Coffee) said three stores — two in Hyderabad and one in this city — had been set up. Three more are set to come up here by the month-end.

The cafe chain is expected to open its doors to consumers by April. Di Bella, who at 38 is ranked among Australia’s youngest millionaires, didn’t indicate who his Indian partner for the current venture was.

In September 2013, Espresso had terminated its intellectual property and product sale licence agreement with Di Bella India, the 70:30 joint venture between Sabharwal and Di Bella. In October, Sabharwal and Di Bella had settled their dispute out of court.

Subsequently, Sabharwal brought another Australia cafe brand, Good Co, to India. Di Bella, on the other hand, focused on redrawing his India plans. His first innings in India, with 14 stores in Mumbai and two in Hyderabad, had lasted barely 18 months. “We will move quickly this time around,” he said, adding, “By the end of 2014, we will have 10 outlets.” Di Bella Coffee sells about 2.2 million cups a week in its home and allied markets.

Expansion plans
It is expected Di Bella Coffee will expand to cities such as Delhi and Bangalore. In the past, the coffee chain had stressed the importance of India to its overall scheme of things.

Positioned as a premium brand, Di Bella Coffee will find ready takers in the metro markets, despite stiff competition from rivals, experts say.

Starbucks operates 34 stores in four cities — Delhi, Mumbai, Pune and Bangalore, which were set up in less than 18 months. The world’s largest coffee house brand, which has a 50:50 JV with Tata Global Beverages for its retail operations and a separate sourcing arrangement with Tata Coffee, is expected to keep up its pace of launches as it looks to scale up operations quickly to make up for lost time.

Home-grown Cafe Coffee Day already has over 1,500 oulets in India and is looking to touch the figure of 2,000 by the end of 2015. Barista Lavazza has over 154 stores, while Costa Coffee, which is rumoured to be scouting for new partners (it currently has a franchisee agreement with Ravi Jaipuria’s Devyani International), has over 100 stores in India.

At Rs 1,000-crore, the coffee chain market in India is growing at a clip of about 30 per cent per annum. According to Saloni Nangia, president at Gurgaon-based retail consultancy Technopak Advisors, the top 40 cities in India, have about 1,700 outlets currently. “These cities can accommodate another 2,000 cafes in the next few years,” she says.

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