Starbucks to open 50 cafés this year

Starbucks, the world’s largest coffee café chain, remains cautious as it gets ready to open its first store in India.

The Seattle-headquartered company on Monday announced a 50:50 joint venture with Tata Global Beverages for starting retail operations in the country, a year after it inked a coffee sourcing agreement with Tata Coffee Ltd.

The retail venture, Tata Starbucks Ltd, will own and operate Starbucks cafes, which would be branded as Starbucks Coffee — A Tata Alliance.

The two companies are investing Rs400 crore in the venture, which will function as a separate entity and have three directors from each company.

The chief financial officer has already been identified, while the chief executive officer “will be in place soon,” said RK Krishnakumar, vice chairman, Tata Global Beverages.
Starbucks’ decision to go with a partner comes despite the fact that the government recently allowed 100% foreign direct investment in retail.

“We have always discussed only a 50:50 partnership from the beginning for India. The partnership with the Tata Group is a long-term investment,” said John Culver, president, Starbucks China and Asia Pacific.

For 2012, Starbucks has an outlook of opening 300 stores in China and the rest of Asia-Pacific.

India will see 50 Starbucks outlets by end-2012, with the first outlet coming up in August or September, in Delhi or Mumbai.
For the record, the largest coffee chain in India, Cafe Coffee Day, currently has 1,200 outlets and will be 2,000 outlets strong by 2014. Other prominent chains, Lavazza Barista and UK’s Costa Coffee run 200 and 80 stores, respectively.

This year will also mark the entry of US-based cafe chain Dunkin Donuts in India.

For Tata Global Beverages, the alliance presents an opportunity to place its products — like the Himalayan packaged water — in Starbucks’ global portfolio, said Krishnakumar.

For Starbucks, Tata’s retail stores will help it sell its packaged coffees and other products. There will also be a co-branded premium tea that the two companies will work together on.
Under a separate agreement between Starbucks Coffee Company and Tata Coffee Ltd, the latter will roast coffee at its upcoming facility in South India for the whole of Starbucks India operations and to export to the Starbucks globally.

Starbucks operates 17,000 outlets globally. India is the 58th country it would have a presence in.