New Delhi: The American coffee company Starbucks and India's Tata Sons finalised multiple joint initiatives to expand their collaboration last week. Some of the initiatives will come into force from the end of this year.
"As we continue on our journey with Tata, we are delighted to introduce the finest coffee from India to a new audience," Starbucks chairman and CEO Howard Schultz said. "Starbucks Reserve Tata Nullore Estates, the first ever Starbucks Reserve coffee sourced exclusively from India, highlights the deep coffee heritage and expertise of both companies to source, roast and distribute the finest-quality Arabica coffees and elevates the story of India coffee for our customers."
Tata Starbucks Pvt. Ltd will also introduce Kenyan and Sumatran coffees at Starbucks stores across India, the company said in a statement on Monday. Starbucks coffee will be available on Vistara, a full service airline, later this year. Vistara is a joint venture between Tata Sons and Singapore Airlines, which operates more than 457 flights weekly to 17 destinations and flew two million travelers by June. Following the success of the tea category in its US stores, Starbucks will extend its Teavana specialty tea brand to India this December, the company said. The joint venture is also collaborating on the development of a signature Indian tea blend that will be available across all Starbucks stores in India.
India has become Starbucks’ fastest-growing market since the first cafe opened in 2012 in a partnership with Tata Global Beverages Ltd. Since then, the chain has expanded to 84 locations across six cities. Starbucks said India will be among its five largest markets in the long term. To crack that list, India will have to surpass the UK, where Starbucks currently has 870 cafes, a Bloomberg report said on Monday. The company’s China and Asia Pacific unit generates about 13% of its total revenue. Starbucks plans to open about 900 new locations in the region in the current fiscal year, compared with just 700 additions in the Americas segment, and 200 in Europe, the Middle East and Africa. Starbucks has more than 2,000 cafes in China alone and is opening about 500 new stores a year in the country.
John Culver, president of Starbucks’ China and Asia Pacific Region said in the Bloomberg report that the company’s growth in India over its first four years in the country has been faster than during the same period in China. India is the second-most attractive market for global retailers to expand after China, according to The 2016 Global Retail Development Index by consultancy AT Kearney. According to the firm, India has in the past couple of years improved the ease of doing business. Clarity on foreign direct investment (FDI) regulations too has helped. To be sure, challenges remain. India continues to be a complex market for foreign retailers, where understanding dynamics at the state level is important as the country’s 29 states have the power to opt in or out of FDI reforms.
Also, infrastructure bottlenecks, including archaic labour laws, complex regulations, high attrition rates, and limited high-quality retail space remain important areas of concern for retailers, said the AT Kearney report, adding that still, the potential is vast as the country presents a $1 trillion retail market. Starbucks also plans to expand the availability of Himalayan Mineral Water, bottled by Tata Global Beverages, beyond Starbucks stores in India to Singapore later this year. It is also exploring opportunities to introduce the bottled water brand to stores across Starbucks China and Asia Pacific region.