Costa’s Brewing Boom: FY25 Sales Froth Up 30% Despite Margin Dip

Image Source: The Economic Times

Costa Coffee India has posted a strong performance at FY25, with operating revenue increasing 30.76 percent to Rs 198.5 crore. Growth, though, has been at the expense of a marginal deceleration in profitability, with inflationary pressures pinching margins.

Performance Highlights
- Profit after tax rose 28.4 percent to Rs 149.7 crore from Rs 116.6 crore in FY24
- Gross margin declined slightly to 75.4 percent from 76.8 percent last year due to higher input costs, mainly coffee beans.
- Brand contribution margin fell from 17 percent to 16.1 percent
- Store average daily sales declined to Rs 27,000 from Rs 33,000
- Same-store sales growth reduced by half to 4.1 percent from 8.7 percent

Expansion and Market Strategy
- Number of stores increased from 179 to 220 stores, focusing on high-traffic areas like airports and also multiplexes
- 40–50 new stores will be opened by Costa Coffee each year, positioning India among the world's top five markets
- India's coffee market is growing at 10–12 percent annually, twice the global average - The brand is riding on Gen Z's growing need for quality coffee, driven by the exposure to Western ways of life

Competitive Landscape
Costa Coffee is being challenged by global brands like Starbucks, Tim Hortons, McCafe, and Dunkin', as well as local competitors Blue Tokai, Third Wave Coffee, and Cafe Coffee Day.

Sources: Economic Times, LiveMint, Rediff Money, MoneyPhobia, MSN News, PTI.