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FMCG brand Rage Coffee is planning to expand its presence in international markets along with increasing its presence in modern trade outlets in the country. It is also planning to open kiosks to increase out-of-home consumption, Bharat Sethi, founder, Rage Coffee told ETRetail.
In the last six months, the brand has expanded its operations in 5 international countries – UK, GCC, Nepal, Bhutan and Sri Lanka.
“We have forayed into these 5 markets with different partners. In the UK, we only have an online presence whereas in Sri Lanka, we have partnered with offline brands that also have an online presence. We are running a distribution-led business in Dubai and in Nepal and Bhutan, as the online market is relatively small, so offline penetration is the key,” he said.
To further cement its position in these countries, the coffee brand is planning to spend Rs 2.5-3 crore on marketing.
Going ahead, the brand is planning to expand its business to countries like Africa, Saudi Arabia, Europe, and North America.
“By this fiscal end, we expect 10 per cent of our revenue to be coming from the international business,” he stated.
To meet the increasing demand, the brand, which offers 15 SKUs, has no plans to open any new manufacturing unit as its recently opened manufacturing facility in Manesar that spreads across 30,000 sq.ft has only 40-50 per cent been utilised.
“We can do 3x to 4x of production of what we are doing right now with an additional packaging line, however, additional investments won’t be required,” he asserted.
In the offline space, the brand has partnered with all major modern trade players like Metro Cash and Carry, Walmart, More, DMart, and Reliance. Currently, it is present across 1,500 modern trade outlets and plans to expand to 1,000 more MT stores by this fiscal end.
“Additionally, we have tied up with 200 distributors and have a presence across 20,000 general trade stores. In GT, we are expanding with small packs worth Rs 2 and Rs 5. Currently, small sachets comprise 30 per cent of our business. By value, it is very low but volume-wise, it will overtake the overall business in the next 18 months,” he stated.
At present, 30 per cent of the business for the brand comes from marketplaces, 20 per cent from D2C and the remaining 50 per cent is equally divided between GT and MT.
“Currently, our CAC (customer acquisition cost) stands at Rs 30-40 for AOV (average order value) of Rs 600. For online, we are focusing on retention marketing and our online customer loyalty stands at 60 per cent,” he said.
In the offline space, throughput per outlet per month for Rage Coffee stands at Rs 2,500 and GMV at Rs 4,500.
OUT-OF-HOME CONSUMPTION
Going ahead, the brand is also planning to expand its out-of-home consumption by opening 2,000 kiosks in the next 36 months.
“In India, we have earmarked about 90 non-metro cities to expand this model. We will be opening these kiosks at institutions, colleges, universities, hospitals, corporate offices, and shop-in-shops,” he said.
The brand will be opening kiosks in 2 sizes – 180 sq.ft (offering only coffee) and 400 sq.ft (offering coffee and food). Around 70 per cent of these outlets will be operated by franchise partners.
“The CAPEX involved in opening 180 sq.ft kiosk stands at Rs 5 lakh and we are expecting the payback in seven months,”he asserted.
The brand, which turned EBITDA profitable last quarter, is immediately looking for strategic partners, patient capital, patient investors, and family offices to raise its next tranche of funding to expand its distribution.
“By expanding our distribution, we aim to become a Rs 500 crore brand in the 3 years,” he stated.
Till now, the brand has raised Rs 50 crore in equity, Rs 5 crore in venture debt, and Rs 5 crore in NBFC unsecured loans and is backed by investors including Virat Kohli and Sixth Sense Ventures.
The brand, which closed the last fiscal at Rs 34 crore, is eyeing to close this fiscal at Rs 55 crore.
Talking to ETRetail, Avin Agarwal, director, Haldiram’s Nagpur said, “We are targeting about a 20 – 25 % increase compared to last year. Though it is a strong number, we expected a much higher number that got affected by the downfall.”
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