GRM Overseas Eyes Entry Into D2C Coffee Market, Acquires Stake In Virat Kohli-Backed Rage Coffee; Report

GRM Overseas, a player in the premium basmati rice export and packaged food sectors in India, is poised to make a move into the booming direct-to-consumer (D2C) coffee market. The company is in advanced talks to acquire a 44% stake in Rage Coffee, a popular D2C coffee brand backed by cricket icon Virat Kohli. This acquisition, if finalized, could mark an expansion of GRM Overseas' footprint in the fast-growing D2C sector and further diversify its product portfolio.

According to a CNBC-TV18 report, GRM Overseas intends to achieve the 44% stake acquisition through a combination of fresh share issuance and the purchase of stakes from existing promoters of Rage Coffee. The brand, which has gained considerable attention for its innovative coffee products and celebrity endorsements, currently has Sixth Sense Ventures and Bharat Sethi as major stakeholders, owning 40% and 30%, respectively. It is speculated that GRM Overseas may consider acquiring a portion of its stakes to solidify its position within the company.

Virat Kohli, who owns approximately 2.5% of Rage Coffee and serves as its brand ambassador, has been instrumental in raising the brand's profile. Alongside Kohli, actor and television personality Rannvijay Singha holds a 1.5% stake, contributing to the brand's appeal among younger consumers. Reflex Capital, another key investor, owns an 8% stake in the company.

Despite its growing brand recognition, Rage Coffee is still working towards profitability. For the fiscal year 2024 (FY24), the company reported net sales of Rs 25 crore but remained unprofitable at both the EBITDA and net levels. In its last fundraising round in May 2023, Rage Coffee was valued at Rs 175 crore pre-money, reflecting investor confidence in its potential. The company's product offerings and its strong D2C model have positioned it as a promising player in the competitive coffee market.

This potential acquisition aligns with GRM Overseas' broader strategic vision. The company, known as one of India's top five premium basmati rice exporters, has been actively diversifying its product offerings. With established operations across the UK, USA, and the Middle East, GRM Overseas has made strides in the Indian FMCG sector through its 10X brand, which includes spices, wheat atta, and rice. The company has also ventured into the edible oils market, further broadening its portfolio.

In a bid to capitalize on emerging market trends, GRM Overseas recently launched a new platform, 10X Ventures. This platform is designed to invest in digital-first, new-age D2C brands, lifestyle brands, and smaller portfolio brands. The company has committed Rs 200 crore to this initiative, with individual investments ranging from Rs 20-40 crore. CNBC-TV18 sources suggest that the investment in Rage Coffee could be the first major deal under the 10X Ventures umbrella, signalling the start of a new chapter for GRM Overseas.

Should the acquisition go through, GRM Overseas has ambitious plans for Rage Coffee. Leveraging its extensive distribution network in India, the company aims to expand Rage Coffee's market presence. This includes not only increasing the availability of coffee beans and soluble powder to its existing international clients but also exploring new avenues such as opening branded coffee shops under the Rage Coffee banner. Moreover, GRM Overseas plans to boost Rage Coffee's online and offline presence.

GRM Overseas also envisions a diversified business model post-acquisition, with 80% of its revenue coming from its traditional rice, atta, and edible oil operations, and approximately 20% derived from new-age acquisitions like Rage Coffee.

As a publicly listed company with a market capitalization exceeding Rs 1,600 crore, GRM Overseas continues to grow its financial muscle. For FY24, the company reported revenues of Rs 1,345 crore and profits of Rs 105 crore, underscoring its robust financial health. The potential acquisition of Rage Coffee could further enhance its growth trajectory, providing a foothold in the lucrative D2C market and opening up new revenue streams.