Business Overview
Vintage Coffee & Beverages is a Hyderabad-based manufacturer and exporter of instant coffee, instant chicory, and related beverages. The company operates as a private label solutions provider for clients across multiple geographies. It does not sell under its own consumer brand. Instead, it manufactures products that its clients sell under their own labels.
The company began operations in 2016-17 and started commercial production in 2018-19. Its manufacturing facility uses a turbo roaster imported from Germany that specializes in hot air roasting. The initial installed capacity was 4,500 metric tons per annum (MTPA). By FY25, this had expanded to 6,500 MTPA. The company plans to reach 16,000 MTPA by FY27, including a new freeze-dried coffee line.
Vintage Coffee sources its raw materials from India, Uganda, Vietnam, and Indonesia. The ratio of domestic purchases to imports is 40:60. It processes primarily Robusta beans (80%) along with Arabica beans.
The company has more than 19 clients with a 98% retention rate. It exports to Southeast Asia, Russia and CIS, Europe, the Middle East, Africa, and is expanding into the US, New Zealand, and Australia. Its domestic market presence is small and served mostly through e-commerce.
Product Portfolio
Vintage Coffee manufactures three primary product types: spray dried coffee (SDC), agglomerated coffee, and instant chicory. It is now expanding into freeze dried coffee (FDC).
Spray Dried Coffee (SDC)
SDC is the most basic form of instant coffee. The production process involves roasting green coffee beans, grinding them, extracting soluble compounds using water, evaporating excess water to concentrate the extract, and then spray drying it. Hot air is used to atomize the concentrated extract into fine droplets, which dry instantly into powder form.
SDC is the workhorse of the instant coffee industry. It accounts for 60-70% of the global instant coffee market. It is cheaper to produce and targets mass market consumers, vending machines, and three-in-one coffee mixes. Emerging markets in Asia, Latin America, and Africa are the primary consumers.
In FY25, SDC constituted approximately 40% of Vintage Coffee’s product mix. This share is expected to decline to 28% by FY28 as higher-value products gain share.
Agglomerated Coffee
Agglomerated coffee is a step up from basic SDC. After spray drying, the fine powder is moistened and fused into larger granules. This improves solubility, appearance, and mouthfeel. The granules look more premium and dissolve better in water.
Agglomerated coffee commands a 2-3% higher margin than basic SDC. In FY25, it constituted approximately 55% of Vintage Coffee’s product mix. By FY28, this share is expected to moderate to 41% as freeze dried coffee enters the mix.
Instant Chicory
Chicory is a coffee substitute or additive made from the root of the chicory plant. It is roasted, ground, and processed into a soluble powder. South Indian filter coffee traditionally uses a blend of coffee and chicory. The company manufactures instant chicory for blending purposes.
Freeze Dried Coffee (FDC)
FDC represents the premium segment of instant coffee. The production process is more complex and capital intensive than spray drying. The concentrated coffee extract is frozen, then placed in a vacuum chamber where the ice sublimates directly into vapor without passing through a liquid phase. This preserves more of the original aroma and flavor compounds.
FDC produces a product that is closer to freshly brewed coffee in taste and aroma. It commands higher prices and margins. The absolute EBITDA margin uplift for FDC is typically INR 30-40 per kg above SDC. This translates to a 30-40% margin premium.
FDC accounts for 20-30% of the global instant coffee market but is gaining share due to its superior quality. It is particularly strong in Europe, North America, and Japan.
Vintage Coffee is building a 5,000 MTPA FDC facility at a cost of INR 450 crore. This facility will become operational by FY27 end and start contributing from FY28. By FY28, FDC is expected to constitute 31% of the company’s product mix.
Product Mix Transition
| Product | FY25 | FY28E |
|---|---|---|
| Spray Dried Coffee | 40% | 28% |
| Agglomerated Coffee | 55% | 41% |
| Freeze Dried Coffee | 0% | 31% |
This shift toward higher-value products is central to the company’s margin expansion thesis.
Packaging Capabilities
Vintage Coffee packages its products in multiple formats: tins (25/50/100/200 grams), sachets (1 gram to 1 kg), pouches (45 grams to 1 kg), and 25 kg corrugated boxes for bulk shipments.
Consumer packs (tins, sachets, pouches) command higher margins than bulk shipments. Industry data suggests a 20%/30% higher gross/EBITDA margin on smaller packs compared to bulk B2B shipments. This differential exists because consumer packs involve more value addition and pricing power.
Vintage Coffee has expanded its packaging capacity significantly. It increased from 600 MTPA in March 2024 to 3,000 MTPA by February 2025. The company plans to add another 2,000 MTPA. This expansion will boost consumer pack exports by 25% and help capture premium revenue streams.
Manufacturing Process
The instant coffee manufacturing process at Vintage Coffee follows these steps:
- Sourcing: Green coffee beans are procured from India, Uganda, Vietnam, and Indonesia
- Roasting: Beans are roasted using advanced Probat profile roasters with hot air technology
- Grinding: Roasted beans are ground to the required particle size
- Extraction: A fully automated extraction system pulls soluble compounds from the ground coffee
- Evaporation: Excess water is removed to concentrate the extract
- Spray Drying: The concentrated extract is atomized and dried with hot air to produce instant coffee powder
- Aroma Add-back: Aroma lost during drying is captured and reintroduced
- Agglomeration: For granulated coffee, fine particles are moistened and fused into larger granules
- Packaging: Products are packed using fully automated lines
The facility operates at high utilization rates. In FY25, capacity utilization exceeded 90%. This drove EBITDA per kg from INR 114 in FY24 to INR 145 in FY25.
Capacity Expansion Plan
Vintage Coffee is in aggressive expansion mode. The capacity roadmap is as follows:
| Fiscal Year | SDC Capacity (MTPA) | FDC Capacity (MTPA) | Total Capacity (MTPA) |
|---|---|---|---|
| FY25 | 3,895 | - | 3,895 |
| FY26E | 6,500 | - | 6,500 |
| FY27E | 11,000 | - | 11,000 |
| FY28E | 11,000 | 5,000 | 16,000 |
The SDC expansion from 4,500 MT to 6,500 MT cost INR 9 crore. A further brownfield expansion of 5,000 MT in SDC at INR 45 crore will become operational by FY26 end. The FDC facility will cost INR 450 crore and come on stream by FY27 end.
To fund these expansions, the company raised INR 215 crore in July 2024. The balance will come from internal accruals. The management is also in discussions with equipment suppliers for financing arrangements.
Geographic Presence
Vintage Coffee exports to multiple regions. The revenue mix by geography has evolved over time:
| Geography | Q2FY24 | Q4FY25 | Q1FY26 |
|---|---|---|---|
| Domestic | 18% | 13% | 14% |
| Russia and CIS | 22% | 23% | 20% |
| Middle East and Africa | 31% | 35% | 38% |
| Europe and US | 8% | 9% | 12% |
| Southeast Asia | 21% | 20% | 15% |
The Middle East and Africa region has grown from INR 6 crore in Q2FY24 to INR 39 crore in Q1FY26. Europe and US revenue has grown from INR 1 crore to INR 13 crore over the same period. All geographies have shown absolute growth, reducing concentration risk.
The company entered Russia and CIS countries within 12 months of targeting them and built a strong customer base. It added African markets for premium range products and Southeast Asia for powder coffee. It expanded to European and Central American markets, which have the highest per capita coffee consumption.
New target markets include the US (the largest consumer market), New Zealand, and Australia.
Client Relationships and Business Model
Vintage Coffee operates as a private label manufacturer. Its clients are typically coffee brands or retailers who sell the product under their own names. The company does not compete with its clients in the consumer market.
One client increased its annual order size from 1 container to 14 containers. This illustrates the growth potential within existing relationships.
The business model works as follows:
- Clients provide indicative annual buying plans
- Actual orders have shorter cycles
- Vintage Coffee sources beans only after receiving orders
- Prices are quoted based on average bean prices plus conversion costs
- The company targets a specific EBITDA per kg in its quotations
This approach protects the company from coffee price volatility. It does not hold speculative inventory positions. It maintains about 45 days of inventory in the form of beans, and one month of finished goods at the factory.
The management has shortened coffee purchase contracts to quarterly from 6-12 months to further reduce price risk in the current volatile environment.
Management Team
The leadership team has deep industry experience, primarily from Tata Coffee backgrounds.
Balakrishna Tati (Chairman and Managing Director) has over three decades of experience in the hot beverages industry. At Tata Coffee, he grew sales from USD 3 million to USD 50 million. He then joined Vayhan Coffee as Director of Sales and Marketing. He founded Delecto Foods in 2012 to manufacture and export instant chicory, growing exports from USD 2 million to USD 8 million. He founded Vintage Coffee in 2016-17.
C. Jawahar (CEO and Director) spent 24 years at Tata Coffee. He launched brands like Tata Cafe and Coorg Double Roast. He expanded Tata Coffee’s non-Russia business to 40% of the total. He joined Vintage Coffee in 2017.
Indra Handique (COO) is a B.Tech in Chemical Engineering from BITS Pilani. He spent seven years at Tata Chemicals and 30 years in the coffee industry across Tata Coffee, Delecto Foods, and Vintage Coffee. He handles process, production, and new blend development.
Y Kranthi Kumar (CFO) is a Chartered Accountant and MBA with 14 years of experience in finance, operations, and private equity investments.
Venkateswarlu T (Deputy Managing Director) holds an M.Tech from BITS Pilani and brings 23 years of production experience in pharma and beverages.
Industry Context: Global Instant Coffee Market
The global instant coffee market is expected to grow at 6% annually through 2030, reaching USD 46 billion. Half of global coffee consumers drink instant coffee. Of the instant coffee segment, 30% consume freeze dried coffee.
Instant coffee targets specific consumer segments: young professionals starting their careers, price-sensitive consumers, and those seeking convenience over artisanal coffee experiences.
Global home consumption of instant coffee is expected to reach 1.35 billion kg in 2025. Combined at-home and out-of-home volume is projected at 1.61 billion kg.
Market Structure by Coffee Type
| Coffee Type | Global Market Share | Expected Growth Rate |
|---|---|---|
| Spray Dried Coffee | 60-70% | 3-4% |
| Freeze Dried Coffee | 20-30% | 7-8% |
FDC is gaining share due to superior quality and growing consumer premiumization trends.
Major Players in Global Retail Instant Coffee
| Company | Market Share (2022) |
|---|---|
| Nestle | 33.1% |
| JAB Holding Company | 7.7% |
| DongSuh Foods Corporation | 2.7% |
| Ajinomoto Company | 1.4% |
| Strauss Coffee | 1.1% |
The market is fragmented beyond the top two players. This creates opportunity for contract manufacturers like Vintage Coffee.
Coffee Bean Price Environment
Global coffee prices have been extremely volatile. Arabica futures have risen 50-60% over the past year due to drought conditions in Brazil (the largest producer), low certified stocks, and geopolitical uncertainty around trade policies.
Robusta futures have also spiked due to prolonged drought in Vietnam (the largest Robusta producer). Prices recently corrected somewhat on better rain forecasts for Brazil.
Vintage Coffee uses primarily Robusta beans (80%). The high price environment increases working capital requirements but also allows for higher absolute realisations if margins are maintained on a percentage basis.
Growth Triggers
Capacity-Led Volume Growth
The company operated at over 90% utilization in FY25. New capacity is essential for growth. The expansion from 6,500 MTPA to 16,000 MTPA represents a 146% increase. Volume growth is expected at approximately 60% in FY26 and 70% in FY27.
Product Mix Shift Toward Premium
The transition from SDC to agglomerated coffee and eventually to FDC will drive realisation growth. FDC commands 30-40% higher margins than SDC. Even within SDC, the shift to consumer packs from bulk improves margins by 20-30%.
Geographic Expansion
Entry into the US, New Zealand, and Australia opens large addressable markets. The US is the world’s largest consumer market for coffee. Europe and the US combined have grown from 8% of revenue in Q2FY24 to 12% in Q1FY26.
Operating Leverage
Fixed costs spread over higher volumes improve profitability. EBITDA per kg rose from INR 114 in FY24 to INR 145 in FY25 primarily due to higher utilization. This trend should continue.
Working Capital Efficiency
Working capital days were 264 in FY24. These fell to 174 days in FY25. Further improvement to 110 days by FY28 is expected as capacity and utilization increase. Faster inventory turns and shorter receivable cycles free up cash.
Risks
Commodity Price Volatility
Coffee beans constitute the bulk of input costs. Arabica and Robusta prices are highly volatile due to weather patterns, supply disruptions, and speculative trading. Sharp movements can squeeze margins despite efforts to align procurement with orders.
Execution Risk
The company is undertaking aggressive expansion including a large INR 450 crore FDC project. Delays in commissioning, cost overruns, or ramp-up difficulties can affect projections.
Geographic and Client Concentration
Despite improving diversification, the company depends heavily on Southeast Asia, Middle East and Africa, and Russia and CIS. Geopolitical developments in these regions can hurt demand. Losing a large client can materially impact volumes.
Logistics and Currency Exposure
As an export-focused business, Vintage Coffee faces shipping cost volatility, container availability issues, and forex fluctuations. Unfavorable movements in freight rates or currency can erode margins.
Competition
The instant coffee industry has established players. CCL Products is the second-largest instant coffee manufacturer globally. Tata Coffee is another competitor. Aggressive pricing or faster capacity addition by peers can challenge market share and margins.
Funding Risk
The FDC capex is partly funded by debt and internal accruals. If cash flows fall short, additional leverage may be required. This can impact the balance sheet and return ratios.
Regulatory and Compliance Risk
As a global food exporter, the company must comply with food safety, labeling, and environmental norms in developed markets. Any lapses can lead to penalties, reputational damage, or loss of market access.
Conclusion
Vintage Coffee & Beverages is a private label instant coffee manufacturer entering a capacity expansion cycle. It processes primarily Robusta beans into spray dried coffee, agglomerated coffee, and instant chicory. A new freeze dried coffee facility will come online by FY27.
The company exports to multiple geographies with Middle East and Africa being the largest market. It has a 98% client retention rate. The management team brings deep industry experience from Tata Coffee.
Growth will come from capacity expansion (4x increase by FY27), product mix improvement (shift to FDC and consumer packs), and geographic diversification (entry into US, Australia, New Zealand). Risks include commodity price volatility, execution challenges, and competitive pressure from larger players.
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