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Times may have changed, but the essence remains the same!

Oct 18, 2018

Times may have changed, but the essence remains the same!
Times may have changed, but the essence remains the same!

Established as a retail filter coffee enterprise for almost 70 years, Cothas Coffee has established a market position for itself, dominating the market share of nearly 80 percent, in the metropolitan city – Bengaluru. As of 2017, Cothas has managed to expand and capitalise on their market presence and share in the neighbouring states – Andhra Pradesh and Tamil Nadu on business to business sales and exports.

For all its magnificence that Cothas as a brand now showcases, its origin had a much humbler beginning from a store on Dharmaraja Koil street in Bengaluru by the late-entrepreneur Krishnaiah Chetty. Later, the business was successfully run by the Cothas brothers. After the turn of the century, Cothas has changed both in its leadership and in reinventing its brand to the evolving market. 

CK Sreenathan, the younger brother, and his son CS Nitin now have complete ownership to Cothas. Mr Nitin who is spearheading the rebranding of Cothas, is often seen composed and has a knack for foreseeing the trend of the retail market. He ushered his grandfather’s company into the millennial age, where the brand is now accessible to take orders online on several ecommerce sites including – Flipkart, Amazon among several others. The young protégé procured expensive machinery from Germany to the newly designed modern storage facilities and clean packing machines to pack their coffee powder. 

With over 12 varieties in coffee powder products, Cothas products are way ahead of their competitors. But to the vary eyes and economists, the heavy investment in an ageing product raises many questions. They cite the growing trend and fascination among young adults and families in having their coffee from coffee shops, which have started to popup in every nook and cranny of the retail space in India.

If one would suspect that this would put Cothas on their back-foot or to be defensive, they couldn’t be more wrong. Cothas has seemed to have relished in taking up the fight to its competitors’ turf. They have expanded by making their blended coffee powder and blending machine on sale in the US. Not to mention that coffee consumption is relatively at a higher level in US. 

To an untrained eye, Cothas would just be like any other coffee manufacturing company promoting a brand. But Cothas prides explaining in-depth on how they have identified and procured their coffee beans for over a half-a-century from the hills of Kodagu and Chikmagalur.

Coffee procured from these regions possess a great quality, aroma and taste. Here, Arabica and Robusta are the two commonly grown beans in vast quantity. After selecting the coffee beans carefully through their partner growers and plantations in Karnataka, they are brought to Cothas’ roasting and manufacturing facility in the industrial area – Jigani in Bengaluru.

Once the coffee powder is made by roasting, then packaging and shipping is handled in the same facility, thus ensuring quick processing of bulk quantities, easing the delivery process.

CRISIL has upgraded Cothas Coffee rating on the bank facility to CRISIL BBB-/Positive. This reflects the business outlook of the coffee company and it is due to healthy improvements made to its operations unit. Economists attribute that this directly saw Cothas’ profitability jumping from 10.8 percent in 2015 fiscal year to 19.9 percent in 2017.

The company also enjoys healthy debt protection metrics and low financial risk profile. Their operation level is modest as shown in revenues of 65.4 crore rupees in 2017 fiscal year. Though the company faces numerous competitors in the market, including established players, the demand for roasted coffee and grounded filter coffee is healthy and has not impacted on the company’s profile for the medium term.