Starbucks to marry RPG

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Mumbai, New Delhi, Sept 25: The world’s largest chain of coffee shops, $6.4-billion Starbucks Corp, has chosen the dark horse in the race—the RPG group—to be its Indian partner and master franchisee. The RPG group owns Spencer hypermarkets and Music World.

Though the fine print of the deal is still being worked out, Starbucks is likely to take 51% stake (the maximum allowed in a retail venture so far) with RPG retaining 49% in a joint venture that will also be the Seattle-based firm’s master franchisee for India.

RPG will appoint a chairman to the JV and the CEO will be chosen by

Starbucks, according to sources involved in discussions. RPG vice-chairman Sanjiv Goenka, who handles the group’s retail business, is expected to be the chairman.

A Starbucks team from Seattle, Washington state, will visit India in October to sign a contract if the late-stage negotiations result in an agreement. “These are rumours. We have not signed any agreement yet. Any discussions are bound by confidentiality clauses,” Goenka told FE.

When contacted, a Starbucks spokesperson e-mailed from the US saying, “We are looking forward to offering the finest coffee to customers in this country within the next 18 months.”

If Starbucks does tie up with RPG, Goenka will have stolen the thunder of Mukesh Ambani’s Reliance Industries, Kishore Biyani’s The Future Group and Mittal brothers’ Bharti group, among others.

These companies have also been actively wooing Starbucks. Experts in the industry feel the company will begin rolling out coffee stores by mid 2007 and estimate that the number of stores will go up to 200 in two years and 500 in five years.