- Starbucks India plans store expansion and menu innovation despite rising losses
- Tata Starbucks is India's largest coffee chain, focusing on growth over profits
- Losses nearly doubled to 1.5 billion rupees amid rising local competition
Starbucks Corp.'s India unit is adding stores and building out a menu of protein foam coffee to Mumbai's street-style buns to boost its footprint in the world's most-populous country undeterred by widening losses.
The business, already India's largest coffee chain by store count, will prioritize expansion over profitability as investment accelerates, Tata Starbucks Pvt.'s Chief Executive Officer Sushant Dash said in an interview. The company is an equal joint venture between Starbucks and the Tata Group.
“India remains a focus area as much if not more,” Dash said, noting the market ranks among Starbucks' top five globally. The unit has turned cash positive, he added, while declining to give a timeline for profits.
The expansion plans show the coffee-maker is doubling down on India despite surging losses, local competition and a slowdown in consumption demand. Globally, the Seattle-based chain is grappling with flagging fortunes: it sold a 60% stake in its China business last year, has been hit by consumer boycotts in the Middle East tied to geopolitical tensions, and is working to revive traffic and streamline operations in its largest market, the US.
In India, losses at Tata Starbucks nearly doubled in the year to March, reaching 1.5 billion rupees ($16.5 million), even as revenue rose 4.8%, according to data platform Tofler. The venture also faces a wave of nimble local upstarts luring coffee drinkers — from no-frills brand abCoffee to specialty coffee roasters like Blue Tokai.
Tata Starbucks has added protein-packed coffee drinks, low calorie snacks, bite-sized portions, shareable munchies and tailored its menu to regional palates in a bid to protect its market share.
Taking a leaf out of its global playbook — it offered egg rolls in Singapore for Lunar New Year — Tata Starbucks is localizing menus with regional flavors. It is selling Malabar egg roast and keema variants in southern India, mutton dish Kosha Mangsho-inspired wrap in Kolkata and Vada Pao-style buns in Mumbai.
Some of Tata Starbucks efforts are delivering results.
Same-store sales growth, a key industry metric, was at 3% for two straight quarters, partner Tata Consumer Products Ltd. said in its earnings call last month, after posting year-on-year declines previously. It also added 12 new stores, pushing the tally to 504 stores across 81 Indian cities.
Younger consumers are also driving demand for cold brews, refreshers and lighter, less milk-heavy beverages, including alternative milk, according to Dash. At the same time, Starbucks is leaning into health trends, with zero-sugar drinks and protein options such as Soya Protein Toastie and a Chicken Ragi Flatbread.
The aim is to integrate its brand into coffee-drinkers' increasingly fitness-focused habits. And for that, “the company will need to keep doing new things,” Dash said.
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