Starbucks to add up to 100 India stores a year as coffee booms

[MUMBAI/SINGAPORE] Starbucks’ India unit plans to open dozens of new stores each year as it seeks to fend off rivals and strengthen its position in the South Asian country’s fast-growing coffee market.

Tata Starbucks, a joint venture between the Seattle-based coffee giant and India’s Tata Group, plans to add 50 to 100 stores annually, CEO Sushant Dash said.

India is “one of the fastest growing markets for Starbucks globally”, he said. The chain has more than doubled its store count to over 500 locations in the past four to five years and maintains a roughly 30 per cent market share in the country, he added.

Rising incomes and changing consumer habits are driving greater coffee consumption in India, fuelling competition from local chains such as abCoffee and Blue Tokai as well as international brands. Only about 24 per cent of Indians drink coffee, compared with around 93 per cent for tea, he said. That creates significant growth potential even as the field grows more crowded.

Starbucks has doubled down on the country of more than 1.4 billion people as it searches for new avenues of growth. The chain has been streamlining operations in the US while grappling with consumer boycotts in South Korea and the Middle East. It sold a 60 per cent stake in its China business last year.

Tata Starbucks operates multiple formats including drive-throughs, highway stores, kiosks and experiential locations, as well as four Reserve stores offering premium coffees. The Reserve format, launched first in Mumbai and expanded to Delhi and Kolkata in recent months, is seeing stronger-than-expected demand for premium beverages, Dash said.

SEE ALSO

Starbucks Korea to give staff history training after backlash over ‘Tank Day’ marketing campaign

Starbucks weighs Japan unit options including 400 billion yen stake sale: sources

Starbucks Korea top executives apologise as ‘Tank Day’ promotion boycott hits revenue

Starbucks scraps AI tool nine months after deployment over item-counting flops

Starbucks Korea head sacked after ‘Tank Day’ promotion sparks public uproar

More

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

While the company remains loss-making, Dash said that it plans to keep investing in expansion, without giving a timeline for turning a profit. The business delivered double-digit growth in earnings before interest, taxes, depreciation and amortisation and halved its losses in the financial year ended Mar 31.

Tata Starbucks also sources most of its products locally, including Indian-grown espresso beans that are roasted domestically, helping shield the business from global supply-chain disruptions.

The company will not “sacrifice growth for profitability”, Dash said. BLOOMBERG