The popular coffeehouse chain Starbucks which is a joint venture between Tata Global Beverages and Starbucks Corp. is planning to expand in smaller Indian cities with a population of less than 5 million. It plans to open more outlets in the next fiscal year.
Starbucks has a long-term goal of making India among its top five markets and this move seems to be a part of the strategy. Currently, Starbucks has 120 stores in India which is fewer than most of the 27 countries where it operates.
In its home country the US, Starbucks at present has a maximum number of outlets. Apart from this, the company has its presence in China, Canada, Japan and the UK as well. It was the last fiscal year that Starbucks opened 25 new stores in India.
“We are happy with the growth we are witnessing in India. This year, we’ll open more stores than the previous year. Every market is different, and each market takes its time to mature. We are here for just five-and-half years, and we are already looking at newer cities, especially tier-II and those with population less than five million for new stores. We’re confident India will be among the top five markets in the longer term,” said Sumitro Ghosh, chief executive officer of Starbucks.
The company’s CEO claims that every Starbucks stores make money in India. In the latest annual report of Tata Global Beverages, it was marked that the sales at Tata Starbucks rose by 28% in the year ended 31 March 2018.
Ghosh is instrumental about Starbucks’ potential, real estate cost and lack of infrastructure. “That’s why we are not in a hurry, but certainly opportunistic,” he stated.
In China and Asia-Pacific together, Starbuck’s operations mark for about 13% of global revenue, where it targets to open 1,100 new stores in the current fiscal year that will end on 1 October 2018. To this, Ghosh said, “China is a different market and Starbucks has been there for 15 years with about 3,000 operational outlets. It’s not fair to compare China with India.”
Café Coffee Day (CCD), which is operated by India’s largest coffee chain Coffee Day Enterprises Ltd has more than 1,550 stores across the country. CCD is the rival of Starbucks and this move seems to be a good one to fight a tough competition with the predominant player in this segment.