The person said the 50:50 joint venture, Tata Starbucks, has so far lined up 14 properties in malls and high streets in the New Delhi capital region, Mumbai, Bangalore and Chennai and will make its India debut in September or October from the commercial capital, Mumbai.
The firm will adopt a cluster approach to simultaneously open three to four outlets in each city they initially go to. Mumbai will be followed by the National Capital Region, Bangalore and Chennai. The properties finalised in hotels include the Ambassador and President hotels under the Vivanta by Taj label, a contemporary luxury chain just notch below the super luxury Taj brand of the Tata group.
“We are looking at both Tata properties as well as non-Tata properties and will focus on how we can become part of the local community where we do business,” a Starbucks spokesperson said in an e-mail reply. The alliance is also in talks with non-Tata hotel chains such as Marriott Hotels to open their outlets.
The joint venture will invest Rs 100-150 crore this year alone and has a total budget of $100 million (around Rs 550 crore) to invest in India in the next two to three years, the person familiar with the plan said.
He added that the Seattle-based coffee chain – the largest in the world — will manage the business and source many of its staff from the Tata-owned Taj Hotels. All the stores in the initial stage will have a combination of the lounge as well as takeaway facilities, he said.
Starbucks operates more than 17,000 stores in almost 60 countries. The coffee titan has been exploring possibilities to enter India for many years. Earlier it had made an abortive attempt to foray into India before it called off a joint venture involving its Indonesian franchise and Kishore Biyani of the Future Group. In 2007, the joint venture withdrew its foreign investment proposal with the Indian government without citing any reason.
Now, Starbucks is back with a new partner and is bullish on India, a country with one of the lowest rate of coffee per capita consumption in the world.
Local chain Cafe Coffee Day and global chains such as Barista Lavazza, Costa Coffee and Gloria Jeans are among others currently operating around 2,000 outlets in the country.
Industry estimates that the Rs 1,000 crore coffee-through branded outlets sector is growing at an annual rate of 20%. “I don’t see Starbucks as a competition… I see them as a player who will make drinking coffee through outlets a routine business,” says Virag Joshi, chief executive of Devyani International, which operates more than 100 Costa Coffee stores in India.
The company plans to invest Rs 400 crore to add 400 more outlets in the next five years. “The market will keep evolving and will keep growing over the years,” says Joshi.