Tata Consumer, the maker of Tata Tea, Tetley and Eight O’Clock Coffee, has incubated a new vending business in the company, managing director and CEO Sunil D’Souza said during an earnings’ call this week. The business, which has crossed the 1,000-machine mark in FY24, is being pushed mainly into the institutional channel, he added.
Tata Consumer’s move to step into the vending business comes four years after the company aborted its bid to acquire Cafe Coffee Day’s vending business over valuation concerns. At that time, Cafe Coffee Day was the largest operator of vending machines in the country at over 50,000 machines, valuing the business at Rs 2,000 crore. The Tatas were said to be eyeing half that valuation as part of its move to grow its presence in the out-of-home and institutional channels.
Experts say Tata Consumer’s vending business is expected to be ramped up in FY25, as rival Nestle India announces the launch of its Nespresso brand of coffee and vending machines in India. While Nespresso vending machines will be targeted at in-home consumption in the country, the company said on Thursday, the machines could also be launched in commercial establishments later, like it is in the West, analysts tracking the firm said.
“In recent years, coffee consumption in India has witnessed a surge, with a discernible trend towards in-home consumption. A growing young population, exposure to global trends, and new experiences has established India as one of the fastest-growing coffee markets for Nestle,” Suresh Narayanan, chairman and MD, Nestle India, said.
The beverage vending business in India is pegged at around Rs 3,000-4,000 crore in size, with players such as Coca-Cola and PepsiCo among key operators, largely in retail establishments, offices and allied institutions.
Cafe Coffee Day, which had been withdrawing its vending machines earlier amid debt concerns and legal challenges from lenders, has now been increasing the count. Its December 2023 quarter results show that it has been recouping ground again in the area, with the vending machine count growing 12% year-on-year to touch 52,609 machines from 46,884 machines last year.