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If one were to believe Sanjay Coutinho, the CEO of Barista who made the startling statement while talking to the media last Thursday, it plans to serve wine and beer in its ‘Cream’ stores from September and had already applied for liquor licences from some State governments. The service might be rolled out first in Delhi, he added.
Unless Barista has inside information to the much awaited policy of the Delhi government to allow opening of wine bars at reduced license costs, it is unlikely that the small cafes selling wine and beer can be profitable for a long time, due to the high license fee required to be paid annually for serving wine and liquor, even though liquor may not be served. There has been a strong lobby and plea with the Delhi government to allow selling wine against licenses costing nominal amounts as in Maharashtra and Karnataka.
However, if the company fulfils its promise, it should be a big boost to its bottom line as well as a boon to the wine industry because under the current government policies, high taxes are only a part of the story-albeit a major part, but availability at department stores or the wine bars and cafes like in Italy where one can order a glass of espresso or Prosecco at the same time in a ‘bar’, is also a substantial part of the hurdles in the way of wine promotion and consumption.
The company also intends to invest close to Rs 400 million in setting up 100 new outlets every year in tier -1 and Tier 2 cities, according to media reports. Currently, Barista has 230 outlets in India and along with Cafe Coffee Day (CCD) it controls 85 per cent of the Rs 4 billion organised coffee retailing market. Barista holds around 20-25 per cent of the market while the rest of the market is dominated by CCD.
“We have applied for licenses (for wine and beer) in Delhi to begin with. It is a format we follow in Italy as well. We plan to start retailing wine and beer from this month itself and gradually make the format available in other states as well,” Coutinho added.
The coffee chain has no plans at present to adopt a franchisee model for its new stores since, according to Coutinho; the Indian market is not ready for it. "We fear that the franchisee would be focused on profit and may cut corners, which could lead to brand dilution," he said.
Barista was bought by the Italian company Lavazza, the sixth-largest coffee roaster in the world, in 2007. |