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Mon, Feb 26, 2007 - Page 10 News List

Starbucks in talks to open Indian store by year's end

TOUGH BATTLE AHEAD After years of speculation, the coffee chain giant is eager to enter a market in which people drink 10 times as much tea as they do coffee


Coffee giant Starbucks Corp is in talks to open its first outlet in India by as early as December to tap the growing affluence of the middle class in a nation of tea drinkers.

"There have been ongoing plans, discussions with potential partners, the government," Colman Cuff, the Switzerland-based director of trading and operations at Starbucks, said on Saturday.

"I believe we are looking at the end of the calendar year" for entering the market, said Cuff, who was in the southern Indian city to attend the three-day Indian Coffee Festival that ended yesterday.

The media has speculated for years about the Seattle-based chain entering the world's second most populous country, which consumes 10 times as much tea as it does coffee.

In China, the chain opened its first outlet in the late 1990s and now has 190 coffee shops.

A company fact sheet posted on its Web site showed that as of last November, it ran 1,434 company-operated outlets outside the US that serve a variety of coffees brewed from beans procured from around the world.

On his coffee buying trips to India, Cuff said he had seen the growth of local chains such as Barista and Cafe Coffee Day.

Local chains are helping spread the coffee cafe culture in the country of 1.1 billion people that exports 75 percent of the coffee it produces.

Domestic consumption last year reached 80,000 tonnes, from 60,000 tonnes the previous year, statistics by Tata Coffee, the country's largest producer of the commodity, showed.

"The growth [comes] mainly from coffee bars mushrooming all over the country and more young people drinking coffee," Tata Coffee managing director Hamid Ashraff said.

India's booming economy has helped push up incomes, leaving the middle classes with more money for non-essential spending, including pricey coffees.

One hurdle to Starbucks' entry may be the 106 percent tariff levied on imported coffees that is blocking Tata from bringing to India the US-based Eight O'Clock brand it bought last year.

"I don't think Starbucks will be willing to change its blends," Ashraff said. Passing on the cost to consumers would make coffees brewed from imported blends too expensive.

"Starbucks offers the same coffees everywhere, from Chicago to Shanghai," Cuff said. "We believe our customers should have the same experience at Starbucks anywhere in the world."

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