Tata to Scale Starbucks to 1,000 Locations in India by 2028

Tata Consumer Products sees significant growth potential in the coffee sector in India, and its focus is on scaling up cafes through its joint venture, Tata Starbucks.

The joint venture, a 50:50 partnership between Tata Consumer Products Ltd (TCPL) and Starbucks Corporation, operates Starbucks cafes across India and plans to increase the number of stores to 1,000 by FY2027-28, up from 457 outlets across 70 cities as of the September quarter. While the growth trajectory remains strong, the company is likely to moderate its pace of new store openings in the short term.

Sunil D'souza  CEO of Tata Consumer Products  highlighted that Starbucks' store profitability is not a concern, and as the business scales, the company expects to generate profits from its outlets. Despite Starbucks being the largest coffee chain in India, with over 500 stores, D'souza emphasized that the coffee market in the country is still under-penetrated compared to similar GDP nations, with considerable room for growth.

Tata Starbucks Aims Expansion

Therefore, the goal of reaching 1,000 outlets by 2028 remains unchanged and with a greater emphasis on increasing the number of stores in each city, particularly in tier II and III cities. D'souza believes that the demand for coffee in smaller cities is now on par with metros, driven by the aspirations of younger consumers.

Tata Starbucks' revenue from operations grew by 12 percent to Rs 1,218 crore in FY2024, but the company’s loss widened to Rs 79.97 crore, from Rs 24.97 crore in FY2023, primarily due to the costs associated with expansion. D’souza acknowledged that while store profitability remains a key focus, other factors such as investments in marketing and capital expenditure affect the overall financial picture. For efficient operations, the company aims to have five to ten stores in each city to ensure density and scale.

Read more - RaptorX has Secured Rs 4 crore in a Pre-Seed Funding

D’souza also sees coffee as a significant growth opportunity in India. While tea is a Rs 25,000 crore market, coffee is currently only a Rs 3,000 crore category but is growing much faster. The growth is visible both in home consumption and the out-of-home segment, which is primarily driven by Tata Starbucks. TCPL’s coffee business, including its vending operations, saw growth rates of 25-29% last quarter, and D'souza expects this trend to continue.

Through its vending business, Tata MyBistro, TCPL is tapping into the emerging convenience trend. MyBistro offers coffee, tea, and other drinks primarily to institutional customers, and while it currently has only around 2,000 vending machines across India, D’souza sees significant potential for expansion.

He noted that the Indian coffee vending market is estimated at 1.5 to 2 lakh machines, and with the strong Tata brand backing the company poised to capture larger share of this segment. D'souza sees the vending business as a gateway to a broader food and beverage portfolio, believing that providing quality service with the Tata name can create a strong market presence.

Startup Stories: Discover inspiring tales of startups overcoming challenges and achieving success.

Startup Funding News: Stay updated with the latest news and trends in startup funding and investment.

Advertisment

Startup News - Stay updated with the latest startup news and trends. Your go-to source for startup ecosystem updates.