Too Much Froth? Starbucks Reins In India Plans As Coffee Competition Heats Up

Starbucks has sharply slowed the pace of its store expansion in India amid intensifying competition in the country’s evolving café culture and signs of consumer fatigue, The Financial Times has reported.

The US coffee giant, which entered India in 2012 through a joint venture with Tata Consumer Products, had last year announced plans to nearly triple its store count to 1,000 outlets by 2028. But that target is now facing headwinds, as middle-class consumers pull back on discretionary spending and rivals flood the market with newer and more affordable café options.

In an interview with The Financial Times, Sunil D’Souza, Chief Executive of Tata Consumer Products, said Starbucks opened only "a little over half" the 30 stores it had targeted for the December quarter. “We saw traffic dropping,” D’Souza said. “So I told my team, let’s moderate a bit. We’ll continue to grow and we’re still opening outlets, but we’ve slowed it down momentarily.”

Starbucks opened a net 16 stores in the three months through December, bringing the total to 473 across 74 Indian cities — well below the post-pandemic record of 29 store additions in the January-March quarter last year.

India, though traditionally a tea-drinking nation, has seen a boom in speciality cafés in recent years, led by homegrown brands like Blue Tokai and Third Wave Coffee, alongside global entrants such as Tim Hortons, Pret A Manger, and Costa Coffee. The report said this surge in new-age coffee brands, coupled with changing urban preferences, is reshaping how Indians consume beverages outside the home.

In response to growing competition and evolving consumer preferences, Starbucks has been actively tweaking its India playbook. The report said the coffee chain introduced smaller "Picco" cup sizes, a milky short masala chai priced at Rs320, and food items like chilli paneer sandwiches — part of its effort to blend international appeal with Indian flavours.

To make its cafés more inviting in smaller cities, the company also moved away from darker, high-end interiors to lighter colours that signal affordability and accessibility.

D’Souza said in the interview that in non-metro markets, many consumers still view the brand as premium. “Often we’ve heard that people are not entering because they see this as... a luxury,” he said.

Despite the slowdown, Tata Consumer remains optimistic about Starbucks’ long-term potential in India. “There’s a long runway — it’s just that in a country like India, you’ve got to have a slightly longer perspective,” D’Souza said. He added that the 1,000-store goal still stands, though the timeline “might go up or down by a year.”

During its third quarter investor call, the company said affordability-focused efforts are gaining traction, even as demand pressures persist. The report said Tata Starbucks clocked 8% year-on-year sales growth in the December quarter, with a 10% sequential rise. Expansion picked up in East India, with new stores in Patna, Ranchi, Jamshedpur, Bilaspur, and Gangtok.

To improve local relevance, the company introduced a “classic menu” tailored to Indian taste preferences. Initial trials showed promising repeat purchases, the company noted. It also launched a Diwali 360-campaign with a media reach of over 40 million, and introduced Monsoon Malabar — a reserve small-lot coffee developed exclusively for the Indian market.

Globally too, Starbucks has hit a rough patch. The report noted the company has seen four straight quarters of declining same-store sales, weighed down by slowing footfall in both the US and China — its two largest markets. In China, it has been undercut by faster-growing rivals like Luckin Coffee.