One of Russia's largest coffee shop chains, Shokoladnitsa, is near to closing a deal to buy out rival company Coffee House, Kommersant reported Thursday, citing sources close to the negotiations.
Shokoladnitsa currently boasts 420 coffee shops throughout Russia, 90 of which are franchises, and the takeover would swell its ranks to about 650, the report said.
The country's next three largest coffee chains — Coffeeshop, Starbucks, and Kofein — have 190 between them.
If the deal does go through, Shokoladnitsa — which is owned by Russian restaurant mogul Alexander Kolobov, whose portfolio includes sushi chain Vabi Sabi, Burger King Russia and Israeli confectioner Max Brenner — could see its profits increase by 50 percent to more than $450 million.
Shokoladnitsa's annual turnover is about $300 million excluding franchises, nearly double that of Coffee House, said Mikhail Burmistov, head of the INFOLine-Analysis market researcher.
Both Shokoladnitsa and Coffee House declined to comment on the report when contacted by Kommersant.
The coffee shop market in Moscow and its suburbs is estimated to be worth about $2 billion, according to INFOLine-Analysis. However, the popularity of coffee shops in Russia as a whole is declining. In 2013, 18.1 percent of R
ussians went to coffee shops — making them second only to fast-food restaurants in popularity. That figure dropped to 13 percent in the first quarter of 2014, which has seen it outflanked by sushi bars and pizzerias, the Synovate Comcon consultancy said.