As Starbucks, the world’s largest coffee chain, expects India to be among its top five markets the world over, Tata Starbucks, the 50:50 Indian joint venture with Tata Global Beverages is well on the road to profitability. With 100 stores across six metros, the coffee chain is all set for an eastern foray by opening three stores in Kolkata early next year. Sumitro Ghosh, chief executive officer, Tata Starbucks tells FE’s Jharna Mazumdar on innovation in tea and coffee and where the brand scores on the numbers game. Excerpts:
When do you expect to be profitable in India?
We hope to be profitable in the near-future. However, it is difficult to give the exact timeline. There is a great opportunity of growth here. Tata Starbucks, the unit in India, was formed in partnership with Tata Group in 2012.
The company reported 14% sales growth to Rs 272 crore in FY17 and narrowed losses to Rs 32 crore from Rs 41 crore in FY16. Globally, consolidated net revenue of Starbucks grew 8% to $5.7 billion in the quarter ended July 2. The company had 26,736 stores across 75 countries, according to company filings on the Registrar of Companies.
What are your expansion and investment plans?
We won’t be able to share specific numbers but going forward, our expansion would depend a lot on availability of proper location. Investment would be significant as India continues to remain an important market for Starbucks. We opened our 100th store and plan to open three more stores in Kolkata by early 2018. The company expects to double the number of employees from present 3,000 over the next five years and aims to boost the proportion of women in its workforce to 40% by 2022, up from 25% at present. Starbucks currently operates 100 stores in India across Mumbai, Delhi NCR, Hyderabad, Chennai, Bengaluru and Pune.
What brands are you planning to launch in India? Also, what are the brands you plan to take overseas from here?
Teavana and Nitro Cold brew Coffee is our latest addition in the stores here. From India, brands like India Estates Blend, among others, will be taken overseas. Further, the Nullore Estate in India, owned by Tata Coffee, is one of the largest Arabica plantations in the Coorg coffee growing region and it is where Starbucks sourced its first single-origin reserve coffee from India. Starbucks Reserve India Tata Nullore Estate is available for a limited time at Starbucks Reserve Roastery and Tasting Room in Seattle. It is also offered in select Starbucks stores across the US while supplies last. At present, coffee comprises 60% of our portfolio while 10% of our portfolio is tea.
Have you witnessed any impact of GST?
There has been no impact of GST on our business and our prices remained the same post the rollout of GST.