In a major step towards entering in the Indian market, Starbucks, the world's largest retailer of coffee, announced a strategic, 50:50 joint venture with Tata Global Beverages, parent of Tata Coffee on Monday. Its first retail outlet will be opened by August or September this year.
Tata Starbucks, the newly formed joint venture company, would operate Starbucks Cafes in India.
“India is one of the most dynamic markets in the world with a diverse culture and tremendous potential. This will be a long term joint venture, but we will not be looking at raising stake to 100 per cent. Our desire is to leverage Tata properties for setting up cafes,” said Howard Schultz, Chairman, president and Chief Executive Officer, Starbucks.
He further said that Starbucks will appoint a CEO for the joint venture shortly.
“The companies will explore collaboration for sourcing and roasting premium coffee beans in India; the agreement will support Starbucks' future market entry and operations in India,” said the Tata Group in a statement.
R K Krishna Kumar, Vice Chairman, Tata Global Beverages, said that India is the only market where Starbucks is co-branding products. “There are unique features in this arrangement. Initial investments for the deal is Rs 400 crore between the two partners. Group chairman Ratan Tata and deputy chairman Cyrus (Mistry) are extremely excited about this venture,” he added.
Krishnakumar further said that the first cafes will open up in Mumbai, Bangalore and Delhi. “We will focus on these cities and look at moving as quickly as possible. By the end of the year we are looking at having 50 stores,” he said adding that the company will look at airports and other strategic locations.
When the broader market witnessed an across the board fall in share prices, Tata Global Beverages shares edged up 0.7 per cent. The BSE Sensex shed 2 per cent on Monday.