Starbucks teams up with Tatas to Enter India

Image: REUTERS/Danish Siddiqui

Vice Chairman of Tata Global Beverages R.K. Krishna Kumar and President of Starbucks China and Asia Pacific John Culver (R) attend a news conference in Mumbai, January 30, 2012. Starbucks Corp said it will open its first outlets in India in August or September and plans to have 50 stores in operation by the end of the year in a joint venture deal with Tata Global Beverages.

The wait for that grande iced skinny mocha just got shorter.

Starbucks on Monday announced plans to enter the Indian market in an alliance with Tata Global Beverages through a 50-50 joint venture. It expects the first stores to be up and running by August of this year.

In a first, the stores would have signage to indicate the Tata brand – the only time the Seattle-based company has agreed to go with an external brand.

Starbucks’ efforts to crack open the Indian market had been languishing for the better part of the last decade due to the company’s inability to find the right partner. They received a boost when the company looked at partnering with Tata Coffee, itself a subsidiary of Tata Global Beverages to source coffee. That was also when the two companies realized that they shared the same values and talks began on a joint venture agreement for the Indian market.

At the same time traditionally tea drinking Indians have taken to coffee. Homegrown Café Coffee Day has 1200 stores across the country while global brands like Costa Coffee have set shop.

The two companies plan to invest Rs.400 crore in the joint venture,which will have its own board and chief executive.

Initially, the joint venture plans to open stores in Delhi and Mumbai and will target locations in malls, office complexes, railway stations and airports, according to John Culver, president, Starbucks China and Asia Pacific.

For Tata Global beverages the alliance is two fold. Tata Coffee, a subsidiary of Tata Global Beverages will roast coffee for Tata Starbucks in a separate facility being set up in south India.Starbucks stores in India will stock brands like Himalayan water from the Tata Global Beverage stable.

Other Tata group companies like Taj SATS could supply food to Starbucks stores and the Taj group of hotels could offer space for the outlets. R K Krishnakumar, vice chairman, Tata Global Beverages said that in time he hoped Starbucks took their brands global.

Both Krishnakumar and Culver were wary of discussing store numbers as they were talking about the positioning and pricing of the products. However, they did indictate that the market for Starbucks in India was seemingly immense. “I wouldn’t be surprised if we are able to open 3000 stores in a short span,” said Krishnakumar.