Starbucks Corp, the world’s largest coffee chain operator, may open shop in India, aiming to replicate the success of stores in China that are now more profitable than those in the US.
Starbucks signed an agreement with Tata Coffee Ltd, Asia’s largest publicly traded coffee grower, to source beans and explore opening stores, the companies said in a statement on Thursday.
The first Starbucks store in India will open in about seven months, Tata Coffee chairman R.K. Krishna Kumar said in an interview with Bloomberg-UTV.
The agreement “is the first step in our entry to India,” Starbucks CEO Howard Schultz said in the statement. “We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations.”
Schultz plans to open 400 outlets, of the 500 new stores planned for the fiscal year that began in October, outside the US. The Seattle-based company operates about 16,800 stores in more than 50 countries, with about one-fifth of its sales coming from non-US locations.
Tata Coffee, majority-owned by Tata Global Beverages Ltd, is a unit of India’s second-biggest industrial group and has supplied coffee beans to Starbucks, the companies said.
About 86 percent of Bangalore-based Tata Coffee’s revenue in the year ended in March came from outside India, mostly from the US, according to data compiled by Bloomberg.
In addition to working together to source beans for Tata’s Indian facilities, the companies will look to develop Starbucks stores in retail outlets and hotels. Trina Smith, a spokeswoman for Starbucks, said in an e-mail that it’s “too early” to give a timetable about opening outlets in India.
Starbucks is aiming to tap a market where consumption of coffee has more than doubled to 100,000 tonnes from a decade ago. Cafe Coffee Day, India’s biggest coffee-shop chain, Barista Coffee Co, a unit of Italy’s Lavazza SpA, and rivals have opened more than 1,200 shops in the past 10 years as people in the world’s largest tea-growing nation develop a taste for cappuccinos, said G.V. Krishna Rau, a former chairman of the state-run Coffee Board.
Tata Coffee also operates retail shops under the brands Mr Bean Coffee Junction and Tata’s Coorg Filter Coffee in south Indian states, as listed on the company’s Web site.
Coffee exports from India, Asia’s third-biggest producer, gained 56 percent last year on an increased crop and as demand recovered in the leading importing countries, the Coffee Board said earlier this month.
Tata Coffee and its domestic rivals shipped 292,550 tonnes, compared with 187,326 tonnes a year earlier, Coffee Board Deputy Director N.V. Nagarajaiah said on Jan 3.
Exports fetched US$644.9 million, up 58 percent, he said.
Starbucks is also adding stores in China, which will be the company’s major growth market in two years, he said in November.
The coffee chain’s profit per store is 22 percent in China, higher than the US, the company said last month. Starbucks aims to increase the number of outlets in the world’s most populous nation to 1,500, from about 400, by 2015.
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