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Starbucks begins minting cash for Tata; premium coffee chain unfazed by slowdown

FE Online
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After under seven years of its India debut, global beverage company Starbucks has started bringing in cash for the Tata Global Beverages. The 50:50 joint venture between Starbucks and Tata has broken even at cash-level, Rakesh Sony, Global Head, Strategy and Mergers & Acquisitions at Tata Global Beverages, told CNBC TV-18. Starbucks enjoyed about 23% growth in the first quarter of this fiscal and has been opening new stores in the northern regions, he added. The company now has a foothold in eight cities and has 157 outlets in India. In the month of August itself, Starbucks opened five new outlets.

Talking about the ongoing slowdown in consumption, Rakesh Sony said that the company hasn’t faced it across its portfolio of products. “Fortunately, we are in categories that are quite defensive and we don’t see a significant slowdown as far as our consumption is concerned,” he told the news channel. Tata Starbucks India expects domestic volume growth at 8-10% in the coming quarters.

Denying the speculations around Cafe Coffee Day acquisition plan, Rakesh Sony said that the group is not looking at CCD for further expansion. “We have our plans to go in India… and we are going as per our plans. We are not looking at CCD,” he said.

Starbucks had notched up its stores numbers recently with the opening of three stores in Ahmedabad and two in Surat. “We will substantially exceed that number this year, and growth will continue to be very strong,” Navin Gurnaney, CEO, Tata Starbucks said recently. The company is also eyeing expansion in cities like Bengaluru, Hyderabad and Chennai where Starbucks already has a significant presence. “With coffee consumption growing in India, Tata Starbucks sees fantastic trajectory of growth, and will remain very bullish on India”, Gurnaney added.

However, in terms of outlets, Tata Starbucks is way behind its rivals with Cafe Coffee Day having over 1,700 stores, McCafe’s 180 outlets and Barista’s over 200 shops in India.