Vintage Coffee & Beverages Ltd is a fast-growing manufacturer of instant coffee and instant chicory, with a strong focus on private labeling and customized solutions for global clients. As of Q2FY25, the company exports 92% of its production to key international markets, including Russia, Africa, Europe, and the Middle East.
Previously known as Spaceage, the company was acquired by Balakrishna Tati and others in June 2021 at ₹20 per share, when public shareholders held up to 93% of its equity. Following the acquisition, the company entered the instant coffee segment, strengthening its position with the acquisition of Vintage Coffee Private Limited and Delecto Foods Private Limited in July 2021. Delecto Foods plays a crucial role in exporting instant chicory and has an established customer base in Russia, Ukraine, and Turkey, along with a growing presence in West African markets through chicory-based coffee products.
Opportunity
With an emphasis on capacity expansion, the company has aggressively scaled up its production. It completed a 2,000 MT/year capacity expansion ahead of schedule, bringing its Spray Dried & Agglomerated Instant Coffee capacity to 6,500 MT/year. Looking ahead, Vintage Coffee & Beverages Ltd aims to further increase production to 11,000 MT/year by FY26, solidifying its foothold in the global instant coffee industry.
Installed Production Capacity (mt/year)
Q1FY25
Q2FY25
Q3FY25
Q4FY26E
Spray Dried & Agglomerated Instant Coffee
4,500
4,500
6,500
11,000
Instant Chicory
1,700
1,700
1,700
1,700
Packing
600
1,600
1,600
1,600
Q3FY23
Q4FY23
Q1FY24
Q2FY24
Q3FY24
Q4FY24
Q1FY25
Q2FY25
Domestic
12%
15%
17%
18%
19%
16%
17%
8%
Exports
88%
85%
83%
82%
81%
84%
83%
92%
Q3FY23
Q4FY23
Q1FY24
Q2FY24
Q3FY24
Q4FY24
Q1FY25
Q2FY25
Capacity Utilisation
28%
28%
28%
41%
52%
52%
52%
85%
Risks:
Raw Material Price Volatility – The company depends on coffee beans and chicory as key raw materials. Any fluctuations in commodity prices, supply chain disruptions, or adverse weather conditions affecting crop yields could impact profitability.
High Export Dependence – With 92% of sales coming from exports, the company is highly exposed to currency fluctuations, geopolitical risks, and regulatory changes in key markets like Russia, Africa, and Europe. Any trade restrictions or demand slowdowns could affect revenue.
Competitive Industry Dynamics – The instant coffee market is highly competitive, with major global players like Nestlé and Tata Coffee holding significant market share. The company’s reliance on private labeling means it competes on price and customization, which could pressure margins.
Capex Execution & Debt Risk – The company has aggressive capacity expansion plans, aiming to scale up to 11,000 MT/year by FY26. Any delays, cost overruns, or financing challenges could strain financials and impact growth projections
Coffee prices have been rising steadily. Any insights on how it would affect vintage coffee’s margins? Does it have the pricing power to maintain the margins?
14th Sept, 2024
Vintage Coffee Private Limited, a Wholly Owned Subsidiary (WOS) of Vintage Coffee and
Beverages Limited (a BSE-listed company), proudly announces the grand opening of its first
Premium Café Lounge , Navi Mumbai. This milestone event will also unveil Vintage Coffee’s new e-commerce platform, allowing customers to conveniently access the company’s elite products online.
Speaking on the occasion, Mr. Tati Balakrishna, Chairman & Managing Director of Vintage
Coffee and Beverages Ltd, stated, ““Today’s consumers’ needs and expectations are changing fast. We are confident that this coffee-loving city will have a great experience with the unique blends of Vintage Coffee, from plantation-fresh coffees to the Lounge format café services.” He further added that “the Master franchisees, M/s. Dhruvatara Marketing Private Limited, have extensive experience and aggressive plans for expanding Vintage Coffee Café footprints across Indian cities and commercial centers as needed.”
This coffee price rise will benefit CCL, when it’s customers renew their long term contracts with CCL, it allows new prices to kick in and increase contract values.
Clarity regarding the same about Vintage Coffee is unknown to me.
Company announces the commencement of commercial production near Hyderabad at fully automated packaging line at our subsidiary, Vintage Coffee Private Limited, starting October 31, 2024, ahead of the planned January 2025 timeline. It will significantly boost the company’s market competitiveness by increasing the share of consumer packs in its export product mix.
Key Highlights:
Strategic Growth in Consumer Packs: The new packaging line will help raise consumer pack exports by
25%, tapping into premium revenue streams due to higher realization compared to bulk instant coffee.
Market Expansion: Strengthening presence in lucrative markets, including the Middle East, Europe, Russia,
and West Africa, enhances VCBL’s export footprint and revenue potential.
I have been monitoring this stock for the last few months, and while the results are good, the price hasn’t shown any follow-up action. Am I missing something, or is it simply that everything is already priced in? Despite a 100% growth, the stock has been flat since September 2024.
Despite the company’s strong fundamentals and steady revenue growth, the stock price has remained subdued. In my view, there are a couple of possible reasons for this:
1.Broader market sentiment-The Indian stock market has been going through a corrective phase in recent months. Global factors such as the tariff war, ongoing geopolitical tensions in the Gulf and the Russia-Ukraine conflict, along with rising India-Pakistan tensions, may have collectively dampened investor sentiment and risk appetite.
2. Cash flow concerns-While the company shows good profitability on paper, it appears to be struggling with poor cash flow generation. This disconnect between reported profits and actual cash flows might be a red flag for the market.
..would appreciate it if others could share their views or insights, particularly around the cash flow issue
Vintage Coffee was a basket case when it was bought by the present owners in 2021 according to my post earlier about it. The buying price was ₹20 per share.
