INDIA – Starbucks, the world’s largest coffee retailer said it expects India to be among the top five businesses without giving a timeline.
This is despite the Indian unit posting its slowest sales growth last fiscal after it slowed down expansion.
“We are excited on the opportunities that India plays for Starbucks going forward. Today, we operate in 75 markets across the globe.
One day, India will be one of the top five markets that Starbucks operates around the world,” said John Culver, group president, Starbucks International after inaugurating its 100th store in the country.
Tata Starbucks, the unit in India formed in partnership with the Tata Group, clocked net sales of Rs 272 crore, a growth of 14%, during the year ended March 2017 and narrowed losses to Rs 32 crore.
The sales performance is a steep decline from nearly 40% growth in business it saw in preceding years, likely indicating that its novelty factor is waning as it focuses on profitability and halts aggressive expansion.
Globally, consolidated net revenue at Starbucks grew 8% to $5.7 billion in the quarter ended July 2. The company had 26,736 stores across 75 countries.
The global coffee chain, last year, extended its partnership with Tata Group beyond India by launching the latter’s single-origin coffee in the US and Himalayan mineral water in Singapore.
“Our joint venture with Tata sits on the top of all partnerships we have in the world,” said Culver adding that its tie-up with Tata will help them achieve long-term aspirations.
“They are a company with unrivalled experience and shared values, committed to social responsibility.”
Experts feel the company may not be able to keep up its high sales as it opens stores in suburbs and towns where most consumers may find Starbucks costly.
Starbucks, which started in India in October 2012, recorded the fastest store expansion in the company’s 45-year history in the initial few years.
The Indian unit of the Seattle-based company opened almost 75 stores until 2015 and has added only 25 cafes since then in a market that’s been subdued, with consumers not eager to spend amid economic uncertainty.
Globally, most cafe consumers including that of Starbucks are attuned to a takeaway culture, which helps cafes add margins with very little cost.
The average size of a Starbucks outlet even in India is bigger than peers such as Cafe Coffee Day in a market where young office-goers and students prefer to spend hours in cafes over coffee and snacks.
The coffee retail said it will enter Kolkata early next year and plans to open three stores there and will constantly evaluate newer cities.