Four years ago when Turner Morrison launched Barista, its gourmet coffee chain, it marked an important point in urban India’s transition to a confident, international lifestyle, based on the increased spending power of a whole new generation of yuppies.
Outside of fastidious south Indian homes, which insist on perfect filter coffee, the heady aroma of freshly brewed coffee was unknown to most Indians, outside of a few five-star restaurants.
Barista changed that forever by offering truly international coffee, cheerful service and a warm ambience that encouraged customers to linger, rather than down their beverage and clear table space for the next customer.
Ersatz Starbucks or better than it — its comparison was always with the best coffee chain in the world.
Barista expanded at a furious pace (130 outlets in four years) and ventured overseas within three years; it also set a high benchmark for competition such as Qwikys and Cafe Coffee Day.
Recently, it featured among the 100 top brands in the country (in a listing by Super Brands India) and announced plans to become the second largest coffee chain globally.
When the Tatas acquired a 34 per cent stake in 2001, it was expected to grow even faster; instead, its high growth, owned-outlets formula came in for closer scrutiny and in June 2003, the CEO quit.
This saw a major strategy shift. It re-positioned the chain by cutting prices and opted for franchisees instead of owned-outlets.
The change was accompanied by a slow decline in standards. Paper napkins and sugar sachets began to be rationed and often vanished, service standards began to decline, and even peeling paint and leaking air-conditioners remained unattended for long stretches.
When smart and aggressive competitors such as Cafe Coffee Day began to snap at its heels, Barista was already showing signs of flagging.
And it was too late then to tinker with the pricing and positioning of the chain.
On Monday, Turner Morrison gave up and sold its 65.45 per cent stake in Barista Coffee Company to Chennai’s Sterling group, which owns the Fresh and Honest coffee vending brand.
Although Tata Coffee retains its stake in the company, all eyes are on what the canny C Sivasankaran does with Barista.
Will he continue to grow the chain or will he consolidate and focus on the bottomline? Or, will he change its character for better synergy between his coffee vending machine business and Barista?
The larger question is, is India ready for a profitable business of gourmet coffee chains, or is the sale of Barista just the precursor of a major shake-up in the entire coffee house business?