India will have 50 Starbucks cafes by the end of the year. The 50:50 joint venture between the Tata group and the iconic coffee chain plans to pump in Rs 400 crore to start operations in India, where entrenched competitors such as Bangalore-based Café Coffee Day and Italy’s Lavazza (which folds in the former Barista brand) are waiting to give it a tough battle.
The first of the cafes will open in August or September, Tata Global Beverages said on Monday as it formally unveiled its joint venture pact with the US-based cofee giant that has become synonymous for many in the West with casual coffee-guzzling experience,often mixed with wi-fi Internet that lures on-the-go knowledge workers.
India is the 58th country that Starbucks is foraying into as it focuses on the Asia-Pacific region to drive its next phase of growth.
“This is exactly the right moment to make a move in this business in the Indian market,” said RK Krishnakumar, vice chairman, Tata Global Beverages. “We are looking at a huge business potential in the long-term.”
The Tatas will also develop and retail a premium tea product, Tata Tazo, through the Starbucks cafes. They will also take its natural spring water brand “Himalayan” overseas and sell it through Starbucks' 17,000 global outlets.
The US chain will in turn look at selling packaged coffee and other products in Indian outlets.
Starbucks was planning to enter India in 2007 but the plans were put off after CEO Howard Schultz left. “Now Schultz is back and we are looking at this as a long-term investment,” said John Culver, president, Starbucks, China and Asia-Pacific.
In the initial phase, the alliance will focus on opening stores in Mumbai and Delhi, followed by rapid expansions into other cities and smaller towns. The JV will own and operate Starbucks Cafes branded as “Starbucks Coffee — A Tata Alliance.”
India’s largest coffee chain Café Coffee Day (CCD) plans to open 2,000 outlets by 2014. CCD is also betting big on its premium offering, The Coffee Lounge. At present, it has 20 lounges and plans to open 100 more. The lounge format is likely to help it target the premium clientele and position itself as a competitor to Starbucks.
The Starbucks-Tata alliance will cash in on existing Tata properties and businesses to establish the brand in India.