Vintage Coffee: Building a Commodity-Adjusted Valuation Framework

Shubham came across Vintage Coffee through an article on the global shift in coffee consumption from Western markets toward Asia. The insight caught his attention, and he decided to dig deeper.

He identified two comparable companies: CCL Products, which holds roughly 7% of the global coffee market, and Vintage Coffee, a much smaller player with under 1% market share. The question was whether Vintage was genuinely undervalued or simply undersized.

Standard revenue-based valuation did not work here. Global coffee prices fluctuate daily, and year-on-year comparisons were distorted by a 15-20% decline in coffee prices over the prior year. Shubham concluded that realization-based metrics would produce a misleading picture and built the analysis around EBITDA per kg instead, a unit that strips out commodity price noise and isolates operational efficiency.

When he ran both companies through this lens, Vintage Coffee's EBITDA per kg came out ahead of CCL's. The reason: Vintage was doing private labeling for B2B clients, which gave it pricing flexibility and margin headroom that the headline numbers did not show.

During the research process, Shubham traced the full value chain of instant coffee and discovered that chicory, a common blend ingredient used to reduce bitterness and extend caffeine, was a meaningful input that the team had not accounted for. He brought this to his managers, who were initially skeptical. He sourced a video demonstrating chicory consumption patterns in South India and walked them through the evidence until they agreed it was a material factor in the investment thesis.

The deal progressed to a portfolio investment decision.