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Cafe Coffee Day - Rs. 2500 Crore Success Story - VG Siddhartha

A wide spread

"A lot can happen over coffee," says the motto for India's largest retail cafe chain, Cafe Coffee Day.This is very hard to disagree with considering the fortunes of a young man from Chikamagalur, Karnataka, who grew up on his parent's coffee plantations and turned into a business pioneer in the new India.

If VG Siddhartha, chairman of Coffee Day Holdings, weren't so successful, you would probably think he has a focussing problem, considering the seemingly unwieldy sprawl that makes up his conglomerate.

His business empire now straddles coffee plantations, coffee retailing, furniture, agriculture, logistics, wealth management and hospitality with estimated revenues of around Rs 2,500 crore.



MindTree's largest shareholder

This is not including all the bets he has made as an investor in IT companies such as Ittiam, Magnasoft, Liqwid Krystal.

Coffee has also allowed Siddhartha the ability to increase his stake recently in Mind Tree, a software services exporter.

It was little more than a decade ago when Siddhartha seed-funded a team of top notch technology entrepreneurs led by Ashok Soota co-founded MindTree.

Upping his own stake - Siddhartha is now the single largest shareholder with close to 12 per cent in the company - is not just a re-validation of his earlier decision, but also a continuation of a business strategy that hinges on loyalty, humility and canny long-term bets — a distinct departure from the cut-and-run exits of the private equity world.


Big-picture man

Siddhartha is that rare individual who effortlessly wears hats - as both a smart investor as well as a die-hard entrepreneur - and this is what probably makes him a winner in both arenas.

He is both an operations guy as well as a finance geek who once took a bus from Bangalore to Mumbai, and hovered around Mahendra Kampani's office till he forced Kampani to give him a job as an equity analyst.

So, what else makes Siddhartha stand out from so many others carving out business empires in India's equivalent of the Klondike gold rush?

'I can tell you that he is one of the most fantastic investors that anybody would have the good fortune to have,' says Ashok Soota, co-founder of MindTree. 'He is so supportive, with a long-term orientation. He sees the big picture,' he adds.


Biggest asset The legacy of Kampani's tutelage has evidently found direct beneficiaries in the companies Siddhartha invests in.

'He knows the FII investments that are coming in and going out from India and what will be their impact on the rupee and dollar rate,' says another MindTree co-founder, Rostow Ravanan (seen here). 'Whenever we make an investment, he advises us as to what kind of mutual fund will give us better returns,' he states.

Perhaps, the biggest asset that Siddhartha has used to his advantage as an investor is his affinity for people and his ability to pick the good ones.

'Generally, more of his investment philosophy is linked to his comfort level with people and his belief that those people will deliver good business models,' says Subroto Bagchi, another MindTree co-founder.


Largest coffee exporter

After working for Kampani, Siddhartha came back to Chikmagalur district - ocated in foothills of Mullayanagiri range and dotted with coffee and tea estates - where his family owned a 500-acre coffee plantation.

In what would turn out to be a pivotal catalyst to his eventual flagship company, he started buying out coffee estates that had fallen on hard times, squeezed out of existence by an international coffee cartel that wanted to keep prices unnaturally low. (He now owns around 10,000 acres in Chikmagalur).

Siddhartha soon spearheaded a mission to New Delhi to persuade the government to end the monopoly on coffee pricing and almost overnight, the industry began to blossom.

He set up Amalgamated Bean Coffee Trading Company Limited and began to export coffee beans from his plantations.

In five years or so, he had morphed his operation into India's largest exporter.

Then, inspired by a chat with the owners of Tchibo, a German coffee chain, Siddhartha decided to open his own chain of cafes in India, at the time a novel idea in a country that had no formative cultural grounding in cappuccinos.

Today, Cafe Coffee Day is a leader in an industry that it virtually created.

The chain is looking to add another 300 cafes to its existing 1,100 , during 2011 and hopes to have 2,000 of them in the next couple of years

Understated leader

It is a curious mix of acute understatement combined with a lead-from-the-front attitude that epitomises Siddhartha and explains his entrepreneurial success.

'The thing that strikes you most when you come in contact with VG Siddhartha is his self-deprecating leadership style,' says Bagchi. 'If Siddhartha could do it, he would rather be as invisible as ether. But make no mistakes, that ether is ever present. It is the medium.'

With Cafe Coffee Day, Siddhartha allowed the germination of a vital strategy that is playing a key role in boosting synergies across much of his portfolio today - essentially by vertically integrating his businesses and unlocking their true value.

His estates, for instance, supply timber for another company that makes furniture for all his Cafe Coffee day outlets.

They provide coffee beans for his retail chain as well as for export purposes.

A newly purchased logistics company, Sical, will handle the supply chain for all his properties amounting to 60% of its total business.

His plantations may soon house upscale resorts.

His latest venture is an effort to set up an IKEA-like business in India, offering moderately priced furniture to the growing middle class.

Risks ahead

These are considerable achievements but the road ahead is an exceedingly difficult one, fraught with different kinds of risk.

Starbucks, the global American chain, is scheduled to join the coffee-fray soon and while Cafe Coffee Day has first mover advantage, Starbucks has deep pockets, global experience and a well-known brand.

According to retail analysts, Starbucks will take at least 4-5 years in India to achieve scale.

Still, Siddhartha will need to be able to thwart poaching wars over a limited pool of trained personnel and will have to keep a keen eye out for flagging standards while he's trying to launch his ambitious furniture project.

Being a one-man-band doesn't help either and the last thing his properties need is an umbilical cord to Siddhartha, worrying about how much time he can give them.

'It is a known fact that his bandwidth is finite and he understands that,' says Jacob Kurien, partner, New Silk Route, who along with KKR and Standard Chartered Private Equity invested a record Rs 1,028 crore during April 2010 to grow his portfolio of businesses.

Human being first

Siddhartha's growth challenges, as daunting as they may be, are easily assuaged by observations on the true nature of the man himself.

'He is a human being first and a businessman next,' says Bagchi.

His capacity to quickly build empathy, to feel for the other person even if he is not personally connected to them is a very rare quality.

'Large hearted and affectionate, reading the tea-leaves even as he is serving you the coffee, that is Siddhartha for you,' adds Bagchi.

General Electric's Corporate Brand Logo Evolution

The company has a great history. It was formed in 1892 by the merger of Edison Electric Light Company (founded by Thomas Edison to sell his invention, the light bulb) and Thomson-Houston Electric Company.

The basic logo font face is still quite similar to what it was in 1892. Over time, a circle engulfing the company name has been added to the logo, which might be due to the increasing global presence and vision of the company. The current logo, which was designed by Wolff Olins, adds blue color to the logo instead of the black color which had been used in all the previous logos. Accompanied with the logo change was also a change in the tagline of the company from “We bring good things to life” to “Imagination at work”.

Mozilla Firefox's Corporate Brand Logo Evolution

An open source web browser, created by Dave Hyatt and Blake Ross, was first of all named as Phoenix, which is visible in their first logo in 2002. Due to some trademark issues, the name had to be changed to Firebird, but the name was chosen so that they would be able to retain the same logo.

Unfortunately, this name also had trademark issues because of existing software. Then, they finally got lucky and chose the name Firefox, which has become one of the favorite and most used browser worldwide. In 2003, the now famous logo was designed by professional interface designer John Hicks.

The logo depicted a Firefox engulfing the whole world, which also signifies the global reach that the company strived for. There has been a minor change in the logo since then, with the colors of the continents using a lighter blue color, just to differentiate them better from the oceans.

Mercedes Benz's Corporate Brand Logo Evolution

The Mercedes-Benz was formed by the merger of two car companies – DMG (Daimler-Motored-Gesellschaft, founded by Gottlieb Daimler) and Benz & Cie, founded by Karl Benz. Both the companies were similar in their work and were situated in close proximity.
It was after the World War I, when the German economy was shattered, that both these companies decided to from a syndicate in 1924, and then finally merge in 1926, called Diamler-Benz.
In 1902, the logo for Mercedes was nothing more than the simple company name. However, it was changed to a 3 pointed star in 1909. The origin of this star came from a postcard by Diamler, where he had drawn a 3 pointed star which represented ‘making vehicles in land water and sky’.
After 1926, a new symbol for Mercedes-Benz came into picture, where the original logo of both the companies was merged into one. It combined the 3 pointed star of Mercedes and the laurel wreath of Benz.
Over the years, the symbol has been improved vastly in design and simplicity. It has been recognized as a symbol representing luxury and top tier cars.

Canon's Corporate Brand Logo Evolution

The company had always wanted a global perspective, and the logos reflected the same as early as 1934. A specialized advertising designer had created the logo which included typeface never seen before in Europe or North America.

The first camera launched by the company in 1934, was named as Kwanon, after the Buddhist goddess of mercy. The logo included the wordings and a picture of the goddess with 1000 arms and flames.
As the years went by, like all other logos we have seen above, the company strived to make the logo as simple and memorable as possible. The logo had only been trademarked in 1935, and after that a lot of designing work went into making the logo more balanced. After 1956, the logo hasn’t been changed, but the designing effort is clearly visible in their simple but classic logo.