Costa Coffee's Remarkable Growth in India

NEW DELHI: Costa Coffee, the renowned British coffee chain, has reported an impressive 30.76% increase in revenue, reaching Rs 198.5 crore in FY25, alongside a 28.4% rise in profit to Rs 149.7 crore.

Expansion and Market Performance

The company's strategic expansion from 179 to 220 outlets in FY25 has significantly contributed to this growth, as highlighted in Devynai International Ltd's (DIL) annual report. Despite a slight decrease in gross margin to 75.4% from 76.8% in FY24, due to rising costs of coffee beans and other raw materials, Costa Coffee continues to thrive.

Challenges and Opportunities

"The brand contribution margin saw a reduction from 17% to 16.1%, with average daily sales (ADS) per store declining from Rs 33,000 to Rs 27,000. This has led to a decrease in same store sales growth (SSSG) from 8.7% to 4.1%," DIL reported. However, the company remains optimistic about India's potential, targeting 40-50 new outlets annually.

India's Growing Coffee Culture

With the coffee sector in India growing at 10 to 12%, twice the global average, Costa Coffee is positioning itself as a key player. The shift in beverage preferences among younger generations, influenced by Western culture, presents a significant opportunity for the brand.

Competitive Landscape

Costa Coffee faces competition from global giants like Starbucks and Tim Hortons, as well as local favorites such as Café Coffee Day and Blue Tokai. Yet, with India poised to become one of Costa Coffee's top five global markets, the future looks promising.