Despite volatility in coffee’s global prices, CCL Products India (Limited) won’t be affected as the firm works on a cost-plus model, said CEO Praveen Jaipuriar.
“Coffee prices have been very volatile in the last one and a half years, but our business has been stable since we work on the cost-plus model. It makes our profitability averse to price volatility,” Jaipuriar told Zee Business.
CCL Products was established in 1994. As the biggest coffee exporter from India, it has a market cap of Rs 7,500 crore. It produces 900+ blends of coffee and exports its products to 100 countries and 400 clients.
With a new production facility in Vietnam that was commissioned last month, the company’s production capacity has been increased to 54,000–55,000 metric tons a year.
In its most recent forecast, the company stated that its volume growth will be between 20 and 25% and its CGR will be between 18% and 20% over the next three to four years.
CCL Products is not only an exporter, but it also exports raw materials used in the production of coffee.
The exchange rate of the US dollar plays a key role in such a scenario where a company is involved in both.
When asked if his company feels the heat of the fast changing prices of the exchange rate, Jaipuriar said that the company’s imports and sales are in US dollars, which further helps in offsetting exchange-induced margin pressure.
“Our imports and sales are in US dollars, so fluctuations in the exchange rate hardly pose any effect on our business. Since we make payments in dollars and get our payments in dollars, they balance out each other.”
The company has a robust B2B structure, and recently it also announced plans to make forays into the B2C segment. When asked what the company’s strategy will be for B2C, Jaipuriar said, “We have not transitioned from B2B into B2C, but both are different segments. Like an FMCG company, we launched the B2C segment and saw sales of Rs 250 crore of domestic products in the first year itself. Out of these Rs 250 crore, Rs 150–160 crore are from pure brand sales.
“We have a good footing in B2C, and we want to launch our products, like coffee and others, in more countries. We want to behave like a multinational FMCG company.”
The company is selling products in different geographies across the world.
When asked about the company’s fastest-growing market, Jaipuriar stated, “Our growth is very all-round; our markets in America, Europe, and the CIS countries are all growing at the same rate. It has benefited our company since we are not dependent on one geography.”
