Italy's Lavazza to Acquire India's Barista Coffee
By Sumit Sharma
March 9 (Bloomberg) -- Lavazza SpA, Italy's largest coffee company, signed an agreement to acquire a 100 percent stake in India's Barista Coffee Co., while Starbucks Corp. awaits government approval for its venture in the country.
Lavazza plans to invest $130 million in India over the next three years, including the cost of acquiring Barista from Sterling Infotech Group, Gaetano Mele, a managing director at the group, said in a telephonic interview from Mumbai. The number of Barista outlets will be increased to 400 by 2010 from 150 at present, Mele said.
``India is traditionally a tea-drinking country but over the past five years, coffee consumption has increased rapidly, especially by the younger people,'' Mele said. ``India's rapid growth also gives us confidence.''
Growing consumption of coffee in India has attracted companies such as Seattle-based Starbucks, the world's largest coffee-shop chain. Barista and rival Cafe Coffee Day have added ice-creams and sandwiches to the menu to lure customers in a nation where about half the population is estimated by the latest government census to be less than 25 years old.
The acquisition of Barista is expected to be complete within four weeks, the statement said. Lazard India advised Lavazza, while Standard Chartered Plc was the adviser for Sterling Infotech.
Lavazza operates from 80 countries and has a 46 percent share of the Italian market, the statement said. It reported $1.2 billion in sales last year.
Lavazza will also acquire Fresh & Honest Cafe Ltd., a vendor of freshly brewed coffee, from Sterling Infotech.
Starbucks plans to enter India in partnership with Kishore Biyani, founder of the country's biggest publicly traded retailer, Pantaloon Retail India Ltd.
The Indian government is awaiting clarifications from Starbucks about its arrangement with the local partner for the proposed venture in the South Asian nation, Ajay K. Dua, secretary of the federal Department of Industrial Policy & Promotion, said last month.
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