More reports on: Foods / beverages, Marketing

Starbucks opens 100th store, aims to make India top-5 market

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25 October 2017

Even as it continues to find profitability elusive, Tata Starbucks, a 50:50 joint venture between the Seattle-based coffee store chain and Tata Global Beverages, plans to continue expanding the number of its stores in India.

On Tuesday, it inaugurated its 100th store in India in Mumbai and announced plans to open its first three stores in Kolkata in early 2018.

''India is one of the most important markets that we operate in. One day, India will be among the top five markets that Starbucks operates around the world,'' John Culver, group president, Starbucks International and Channel Development, told journalists, but refused to be pinned down on a timeframe for this.

Starbucks currently operates in 28,000 stores across 75 markets in the world. In India, it now has 100 stores spread across six cities.

Starbucks opened its first store in India in 2012 in Mumbai's Horniman Circle. In the last five years, the coffee chain - the most frequented retailer in the world - has opened stores in Pune, Hyderabad, Chennai, Delhi NCR and Bangalore. The US is the largest market for company, followed by Canada, China, Japan and UK.

It has taken Starbucks five years to open 100 stores in India. In comparison, the firm plans to open 500 stores per year in China, doubling its store count to 5,000 by 2021.

''We believe that one day India will be one of the top five markets. I won't put a time frame to it. It's over the long haul. We will make the right investments along the way in the business to build out the stores and the footprint,'' Culver subsequently told Mint in an interview.

''Not only do we see growth in terms of top line and bottom line, more importantly we see growth with our people and the investments we make in our people.

''Today we are also announcing that 40 per cent of our workforce will be female. Right now we are at 25 per cent,'' he said.

Coffee sales account for 60 per cent of Starbucks' topline, and tea constitutes another 10 per cent. Starbucks introduced the Teavana brand in India in January and Culver said they will continue to make investments in tea, a fast-growing segment in India.

This is despite the Indian unit posting its slowest sales growth last fiscal after it slowed down expansion.

The venture continues to report losses, although its most recent financials for FY17 said the venture narrowed losses to Rs16.13 crore from Rs20.07 crore in FY16.

Tata Starbucks saw clocked net sales of Rs272 crore, a growth of 14 per cent, during the year ended March 2017. The sales performance is a steep decline from nearly 40 per cent growth in business it saw in preceding years, likely indicating that its novelty factor is waning as it focuses on profitability and halts aggressive expansion.

Globally, consolidated net revenue at Starbucks grew 8 per cent to $5.7 billion in the quarter ended 2 July. The company had 26,736 stores across 75 countries.

The coffee chain last year extended its partnership with the Tata Group beyond India by launching the latter's single-origin coffee in the US and Himalayan mineral water in Singapore.

''Our joint venture with Tata sits on the top of all partnerships we have in the world,'' said Culver, adding that its tie-up with Tata will help them achieve long-term aspirations.

According to The Economic Times, experts feel the company may not be able to keep up its high sales as it opens stores in suburbs and towns where most consumers may find Starbucks costly.

Globally, most coffee consumers including of Starbucks are attuned to a takeaway culture, which helps cafes add margins with very little cost. But the average size of a Starbucks outlet in India is bigger than peers such as Cafe Coffee Day in a market where young office-goers and students prefer to spend hours in cafes over coffee and snacks.





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