Seattle-based marquee coffee chain Starbucks will soon turn its MoU with Tata Coffee into a full-fledged JV, in which it will initially hold a 26% stake. The JV will then open outlets in all major metros.
After reviewing its market share in the premium coffee segment and level of acceptance of the Starbucks brand in India, the American coffee maker will raise its stake up to 51%. This is expected to happen within a year, after which more outlets will be opened in more cities.
The government allows up to 51% foreign direct investment (FDI) in single-brand retail. As of now, Starbucks and Tata Coffee, one of the region?s leading providers of premium arabica coffee beans, have signed a a non-binding MoU to collaborate in sourcing of coffee beans and roasting facilities relating to Starbucks entering retail operations in India. Starbucks will face stiff competition from seasoned domestic players like Barista and Cafe Coffee Day who have carved a significant market presence over the last decade. When contacted, the Starbucks global spokesperson said, ?We are excited about the great opportunities that India presents to Starbucks and look forward to offering high-quality coffee, handcrafted beverages, legendary service and the unique Starbucks experience to customers in India. We have for some time engaged in conversations with a range of potential Indian partner companies. We hope to move things forward in our partnership and planning soon; however, it is too early to comment on a definitive time-line or talk about the specifics right now.? Tata Coffee MD Hameed Huq could not be reached for comments.