Gloria Jean’s to set up cash-&-carry subsidiary in India

NEW DELHI: US-based coffee chain major Gloria Jean’s is setting up a wholly-owned cash-and-carry subsidiary in India to supply coffee beans, merchandise and equipment to its cafes in the country operated through the franchisee route.

The retailer currently has a master franchisee agreement with Citymax Hospitality (India). Gloria Jean’s has applied to the Foreign Investment Promotion Board (FIPB) for permission. Under the current law, 100% FDI is permitted in the cash-and-carry wholesale business.

The proposed Gloria Jean’s subsidiary would be involved in local procurement of roasted coffee, apart from paper cups, syrups and equipment. It would also import incidental products from China, Australia and other countries. The cash-and-carry subsidiary would sell coffee and other incidental products to Gloria Jean’s master franchisee in India.

This is similar to the model being followed by Wal-Mart, the world’s largest retailer, in India. The retail giant has invested directly in a cash-and-carry subsidiary which will supply to the front-end stores under a franchisee agreement with the Bharti Group.

Taking a different approach, Starbucks, the world’s largest coffee retailer, had last year applied to the FIPB for setting up a 51:49 joint venture with an Indian partner for investing in single-brand retail stores in the country.

However, the application was rejected twice for lack of clarity over the shareholding pattern of the proposed JV. Starbucks withdrew its application last July, without citing any reasons.

Gloria Jean’s entered into the master franchisee agreement with Citymax in December 2007 to set up 500 coffee outlets across the country over the next 10 years. The cafe chain is known for its hot and cold coffee drinks including traditional espresso, blends and whole bean coffees, specialty teas, pastries and coffee accessories.

In India, it is targeting executives in the age group 25-45 years, positioning itself higher than Cafe Coffee Day and Barista and closer to Costa Coffee. Gloria Jean’s also plans to retail roasted coffee under the brand name GJC in India.

Founded in Chicago as a small coffee and gift shop, Gloria Jean’s today has more than 850 stores in over 30 countries. Citymax India is part of the Dubai-based retail major Landmark Group. The organised coffee retail market in India has around 1,200-1,500 stores.

SPAR International may launch large kirana stores in India

BANGALORE: The $37-billion Dutch retail giant SPAR International, which has tied up with the Landmark Group for its hypermarket foray in India, may bring in large format ‘kirana store’ under its fold. This could happen in SPAR’s second phase of expansion beginning 2009.

Along with its India master licensee, Max Hypermarkets, the Dutch behemoth plans to have sub-licencee arrangements with larger kirana stores to kickstart the neighbourhood supermarket format in the country.

Globally, the neighbourhood store or the local supermarket is the most widespread format of SPAR International. With focus on fresh food, these supermarkets aim at meeting local needs. “As modern retail progresses in India, people who run the small stores will expand into large neighbourhood stores. We will work with these people who run their own local supermarkets. These independent retailers can be part of the Spar umbrella in India,” SPAR International MD Gordon R Cambell told ET. Under the sub-licencee arrangement, SPAR will provide retail expertise on the store layout, technology knowhow and merchandising to these local supermarkets. Besides local supermarket, the other three formats operated by the retail major are hypermarket, large supermarket and SPAR Express. SPAR International operates 13,700 stores in over 34 countries.

It works with 82 local partners in these countries. Globally, the retail major does not take equity in the local company. In an effort to further expand its presence in India, the company also plans to unveil SPAR Express format in the long term.

SPAR Express is the format for the areas of high consumer footfall such as railway stations and airports. “SPAR Express will come much later in the country; we need to get the volume first,” Dr Cambell said.

Meanwhile, Max Hypermarket is opening the second SPAR Hypermarket in Bangalore in two weeks. By 2009, Max Hypermarket will unveil six Spar hypermarkets and one supermarket in India. Max Hypermarket aims to clock revenues in excess of Rs 500 crore on an annualised basis from these seven stores.

In the second phase, Max Hypermarket plans to open 30 SPAR Hypermarkets across Karnataka, Andhra Pradesh, Tamil Nadu, NCR and Punjab. For expanding into other regions, SPAR could look at partnering with other retailers, but only in consultation with Max Hypermarket India, which has the first right of refusal.

SPAR International also plans to introduce private labels in the stores. The company has a portfolio of 400 private labels and some of these will be introduced at hypermarkets in India by the year end.