Starbucks to form JV with Pantaloon

After the Centre put on hold a proposal from Starbucks to open retail outlets in India, the US-based coffee chain major has roped in the Kishore Biyani-promoted Pantlaloon and VP Sharma, head of its Indonesian franchise, to gain an entry into the country.

Starbucks will form a venture with Sharma, president and director of PT Mitra Adiperkasa, Indonesia, and Biyani, managing director, Pantaloon Retail India, Sharma was quoted as saying by news agencies. He, however, declined to provide financial details.

Starbucks' venture with New Horizons, in which 51 per cent is held by Sharma and the remaining by Biyani, will open its first store in New Delhi by the end of this year, Sharma said.

When contacted, Kishore Biyani, who is on a personal tour to the US, refused to comment. However, a company official confirmed the development.

News agencies had quoted Starbucks spokeswoman May Kulthol yesterday as saying that the firm was seeking joint venture partners for India. However, she had declined to identify who the partners would be.

In October 2006, Starbucks had said it planned to have a presence in 40 countries, including India. Starbucks had said at that time that it was negotiating the terms of operations in India.

According to estimates, entry into India would enable Starbucks to triple its stores to 40,000 worldwide by expanding into emerging markets. It will have to compete with the established local chains such as Barista Coffee and Cafe Coffee Day.

"It's a status symbol to have a Starbucks cup in your hand in countries such as China. I think that'll translate to India as well,'' said Rick Drake, director of research at ABN Amro Asset Management in Chicago. "More Indians are working in these professional jobs that give them more disposable income.'' he said.

The chain now has 12,440 stores worldwide and, Chairman Howard Schultz said last month. Schultz said that the company's Indonesian franchise will set up the Indian venture.

In fact, Starbucks was one of the 15 companies which applied to open stores in the country after the Centre allowed FDI in retailing of single brand products last year. Nine of those companies got the government's approval.

Proposals from three others, including Starbucks, are pending with the commerce ministry, industry secretary Ajay Dua had said last week.

"We have sought more details on the nature of the business they want to do and the nature of the arrangement they want to have," Dua said.

He said it wasn't clear from Starbucks' proposal if it wanted to open only coffee shops or also operate a chain of restaurants. "Once we have their response, and if we are satisfied, we will move the proposal to the FIPB for clearance," Dua had said.