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Hyderabad-based CCL Products (India) Limited, which exports processed coffee to 64 countries, is planning to expand its presence in the domestic market besides focusing on brand building in the country.
CCL’s chairman and managing director Challa Rajendra Prasad told Business Standard that the company had decided to spend 10 per cent of its net profit on brand promotion. The company sells instant coffee in the domestic market under the brand name Continental Speciale’.
CCL would be accruing a net profit of Rs 50 crore in the current financial year as against a profit of Rs 36.53 crore reported in 2011-12. The company’s net profit during the 9 months ending December 2012 stood at Rs 36.52 crore, he said.
CCL, set up in 1994 as an export unit (EoU), has also targeted to sell 25 per cent of its produce in the domestic market in the next three years. In the current year, the company’s domestic sales increased from about 3 per cent in the previous year to 10 per cent of its total sales.
“Better price realisation, increasing demand for coffee in India and absence of any competition in the country for our freeze dried coffee have motivated us to focus on the domestic market,” Prasad said, adding though an EoU, CCL was now eligible to sell 50 per cent of its produce in the domestic market.
According to Prasad, CCL will expand its sales in the country not only through promotion of its own branded products but also by providing private label products to various retail chains. In this regard, CCL already has a tie-up with Reliance and Spencer’s and is in discussions with various other retail chain companies in the country.
At present, nearly 7,000 tonnes out of the annual 30,000 tonnes of instant coffee produced by CCL was being sold as private label products. “We are the largest private label instant coffee manufacturers in the world,” Prasad claimed.
Private label products are those manufactured or provided by one company for offer under another company’s brand.
CCL's executive director, Challa Srishant, said private label products in the domestic market on Thursday accounted for 50 per cent of the 300 tonnes of instant coffee sold by CCL during this year. The share of private label products would increase as the company would be forging tie-ups with more retail chains.
Since 2005, Prasad said, coffee consumption in the country had increased from 55,000 tonnes to over 100,000 tonnes a year. Driven by increasing per capita income and urbanised lifestyle, the domestic market demand for instant coffee was stated to be growing at over 10 per cent annually. The total domestic market size for coffee was estimated at Rs 4,000 crore. Of this, instant coffee, which has more value addition, accounts for Rs 3,000 crore.
CCL currently has a 20,000-tonne per annum (tpa) manufacturing plant in Guntur district of Andhra Pradesh and a 10,000-tpa unit in Vietnam. It also has a 3,000-tpa packaging facility in Switzerland.