Amid growing speculation regarding Starbucks’ future in India, Tata Consumer Products (TCP), the joint venture partner of the American coffee giant, has strongly denied reports suggesting the brand’s potential withdrawal from the Indian market. Speaking to CNBC-TV18 on December 19, Tata Consumer clarified that these rumors were “completely false and baseless.” According to the company, Starbucks’ presence in India remains strong, and the partnership with Tata continues to thrive, built on shared values and a commitment to the Indian market.
Store Openings Delayed, but Expansion Plans Remain
Earlier this month, on December 15, Reuters reported that Tata Consumer was likely to delay some of its planned Starbucks store openings, citing a slowdown in footfalls and the impact of inflation. Tata Consumer’s CEO, Sunil D'Souza, told Reuters, “We will calibrate for the short term may be instead of opening 100, we will open 80 now, and next year we will open 120 instead of 100.” Despite this delay, D'Souza emphasized that the goal of opening 1,000 Starbucks stores in India by 2028 remains intact.
Currently, Tata Starbucks operates over 450 stores across the country, more than double the number it had four years ago. However, D'Souza pointed out that the scarcity of high-quality retail locations with significant foot traffic continues to be a challenge for further expansion. To overcome this hurdle, Tata Starbucks has expanded its dedicated team to focus on identifying prime locations in advance, particularly as new real estate developments emerge.
Sales and Revenue Amid India’s Growing Coffee Culture
Despite the current challenges, Starbucks India’s financial performance shows promise. In the last fiscal year, the company’s sales rose by 12% to reach $143.6 million. However, in the first half of FY24, revenue growth was more modest, reflecting the slowdown in consumer spending and inflationary pressures.
D'Souza remains optimistic, highlighting that the company’s investment in the Indian coffee market will pay off in the long term. While café density in India remains low compared to other Asian countries like Indonesia, Vietnam, and the Philippines, the growth potential is significant. With India's growing coffee culture, the market is expected to expand, providing ample opportunities for Starbucks to increase its footprint.
Future Outlook for Tata Consumer Products
Looking beyond Starbucks, D'Souza also provided an update on Tata Consumer’s broader business outlook. He forecast that the company’s revenue would increase in the double-digit percentage range during the second half of the financial year. However, he cautioned that rising prices for raw materials, including tea, could pressure profits. Despite these challenges, Tata Consumer remains committed to its long-term growth strategy and its partnership with Starbucks in India.
