CCL Products is optimistic about meeting its volume growth target of 10-20% for the current fiscal year, as CEO Praveen Jaipuriar reports that the rise in coffee prices has not significantly altered consumption habits. Jaipuriar, in an interview, highlighted that because the company operates primarily in the instant coffee sector—a market segment dominated by in-home consumption—the impact of price increases is less pronounced compared to out-of-home coffee consumption.
As a result, CCL Products has not observed any notable changes in consumption patterns, which supports their confidence in achieving their volume growth projections. The company’s margins remain unaffected due to their Cost Plus pricing model, which ensures that costs are covered regardless of price fluctuations.
Despite recent concerns about elevated coffee prices caused by supply chain disruptions and seasonal factors, CCL’s stock has surged by 28% over the past month. Prices for Arabica coffee have recently soared to their highest levels in 13 years, contributing to the volatility in the market. This volatility has led customers to shorten their contract durations from a year to just a few months, complicating the company’s ability to forecast volumes with precision.
Jaipuriar explained that although the rising coffee prices and increased volumes put added pressure on working capital, the company benefits from a system where working capital is only allocated for confirmed contracts. This approach means that CCL Products only purchases coffee once contracts are secured, ensuring that all working capital is effectively utilized.
This system mitigates some of the risks associated with price fluctuations and contract uncertainties. Looking ahead, CCL Products anticipates a robust topline growth of between 20% and 30% for the fiscal year 2025. The company projects that its earnings before interest, tax, depreciation, and amortisation (EBITDA) will stabilize around ₹105-110 per kilogram.
As of now, CCL Products boasts a market capitalisation of ₹10,604.79 crore, reflecting its strong market presence and investor confidence. The company’s strategic approach to managing working capital and adapting to market conditions positions it well to navigate the challenges posed by fluctuating coffee prices and changing consumer behavior.
CCL Products is a leading global instant coffee manufacturer specializing in both freeze-dried and spray-dried coffee. Renowned for its high-quality products and Cost Plus pricing model, the company serves diverse markets with a focus on maintaining robust growth. With a market capitalisation of ₹10,604.79 crore, CCL Products continues to thrive amid evolving coffee industry dynamics.
