The US chain’s coffee shops may open in the second half of this year.
US-based coffee giant Starbucks is fine tuning its plans to set up stores in the country in partnership with Tata Coffee. The two parties are likely to announce the blueprint by the end of this month.
Starbucks would open the stores after forming an alliance with Tata Group by the end of this month, Tata Coffee Managing Director Hameed Huq said in New Delhi on Thursday.
“We are on the verge of signing the contract. We will announce the alliance by the end of this month and are working on final modalities of the agreement,” Huq said. Starbucks already has a deal with the Tata group firm to source coffee for its global operations.
| BATTLE FOR THE BREW The Indian market can absorb up to 5,500 outlets, a reason why global coffee chains want to set up base here. Starbucks’ arch-rival in the US, Dunkin’ Donuts, will launch operations in India in tie-up with Jubilant Foodworks |
| Who’s brewing big? Rs 1,000 crore Size of the coffee chain market in India |
| 1,600 Total number of outlets in India |
| 1,200 Cafe Coffee Day outlets |
| 225 Barista outlets |
| 75 Costa Coffee outlets |
| 100 Others |
| * In June 2007, Starbucks had said it would file a revised application for its entry into India after its earlier proposal for franchise operations was put on hold by the Department of Industrial Policy and Promotion |
| * The department said Starbucks’ plan did not conform to FDI rules. The coffee major had proposed to enter the Indian market through a franchise agreement, with 51% owned by its Indonesian franchisee V P Sharma and the rest by Future Group’s Kishore Biyani |
| * Post this, the company was in talks with a number of players to launch its outlets before finally signing an MoU with Tata Coffee in 2011 for sourcing and roasting coffee beans in the latter’s Kodagu facility in Karnataka |
Starbucks faces competition from Barista Coffee Co, a unit of Italy’s Lavazza SpA, and Café Coffee Day, run by the Amalgamated Bean Coffee Trading Company Ltd in India. Consumption of coffee in India doubled to over 100,000 metric tonnes between 2001 and 2010, the Coffee Board of India estimated. An agreement that might lead to opening the first store in the second half of this year would be completed this month, Huq said. He didn’t comment on terms of the expected accord. Some of them could also be opened at Tata properties.
In a memorandum of understanding (MoU) last year, the two companies had also agreed to explore the opportunities for opening coffee shops in India. A recent decision by the Indian government to allow 100 per cent foreign direct investment in single-brand retail enables Starbucks to enter India on its own and without partnering with an Indian company. On January 10, the government fully opened the doors to international single-brand retailers, paving way for global chains to have full ownership of their India operations.
“We are excited about the great opportunities that India presents to Starbucks,” John Culver, president of Starbucks’ international business said in an emailed statement last week. “We are moving forward with MoU discussions and planning, and hope to make an announcement soon.”
Nasdaq-listed Starbucks serves coffee, baked products and other food items at over 17,000 retail stores in over 55 countries.
