"We'll have a billion-dollar coffee business in 7-8 years"

Ask V. G. Siddhartha the number of Cafe Coffee Day outlets on a given day and he fumbles. The chain has been expanding at four a week in the last two years, which has almost single-handedly pulled up coffee demand in India by six per cent a year (up from two per cent until 2000).

That pace of growth is only going to accelerate. Siddhartha predicts domestic coffee consumption will increase so much that India will not have any quality coffee beans left for exports in about seven years. Edited excerpts from an interview ranging from his businesses to family:

How will growth in the next decade be different from that in the past?
In 1996, we had one store. In 2005, we had 200 stores. Today, we have 918 cafes in 139 cities, besides four in Vienna and two in Karachi. Up to the year 2000, there was no great growth. Today, India has 1,300 stores if you put all cafe brands together; we have a 70-75 per cent share of that market. India will have 5,000 stores in the next five years. Our share should be about 40 to 50 per cent. The cafe business currently contributes about 60 per cent of Amalgamated Bean Coffee Trading Company's revenues and that will become 80 per cent in three years.

We feel that over the next seven-to-eight years, we will have a billion-dollar revenues in the retail coffee business. At least 20-25 per cent of that growth will come from acquisition of smaller stores. Every day we are looking for acquisitions, especially in the Middle East, China, and East Europe. We want to own 100 cafes in Europe in three years. The US is not my target; it's a mature market.

Does growth in your cafe business mean you will exit exports?
Our own internal consumption will be so much that I will not have anything left to export. We are consuming 6,000 tonnes annually against exports of green beans of 18,000-19,000 tonnes in 2009-10. We are not concentrating on growing our export business. Building the retail brand is our priority. The export business gives us a margin of between five and seven per cent compared to 23 per cent in retail. Coffee growers in the world produce green coffee beans worth $10-12 billion every year; the retail market size of coffee is $120 billion. Tell me, which side of the table would you want to be?

Are you okay if 100 per cent foreign direct investment is allowed into coffee retailing?
Every retail chain thinks India and China will grow the fastest. I respect and welcome competition and new entrants will always expand the market. With competition come good practices. It does not matter to us if the government allows 100 per cent FDI into retail. In fact, many are already there through the backdoor. Let them come directly.

Tell us about your real estate and infrastructure businesses.
In five years , we will have 6 million sq. ft. of special economic zones developed from the present 2.5 million sq. ft. We currently have three resorts and in the next four years, we will have seven more. Remember, this number can become double because so many things are happening and new opportunities are being thrown up at breakneck speed.

You have to date tapped only private equity investors for capital. When can a CCD initial public offer be expected?
Not in another five years. I have spent time in stock markets early in my career. There is no point entering primary markets unless you are a company with a revenue of Rs 2,000 crore. The markets are poised to grow. In 1984, India had a market cap of $10 billion. Now it has grown to $1.3 trillion and will reach $5-6 trillion in the next 5-6 years. We will go for our IPO when our business is substantially valued. I have told our PE investors to look at a timeline of five to six years for healthy returns.

Are your two children (both boys, one 16 and the other 14) interested in the coffee business?
No. I don't believe in all this succession planning. They are free to pursue their fields of interest. I believe ownership and management are two different things. It will remain that way in Coffee Day group.

Being the son-in-law of External Affairs Minister S.M. Krishna, has politics ever attracted you?
Not at all. If you join, you may have to do things your conscience does not permit, but you have no option but do it.

Has this relationship helped the growth of your business?
Sometimes it will work against you in business. Being related to a politician may help you get small bank loans but not beyond that. To do bigger things in business, you need to build scale.