Tata Consumer Products is betting big on the coffee business in India, with plans to scale up its cafes under the Tata Starbucks joint venture.
According to Sunil D’souza, MD & CEO of Tata Consumer Products, “With Starbucks, we are very clear that the store profitability is not an issue. And as we get to scale, we know that we can generate profits out of it.”
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Tata Starbucks runs 457 stores in 70 cities
Tata Starbucks, a 50:50 joint venture between Tata Consumer Products and Starbucks Corporation, currently operates 457 stores across 70 cities in India. The company plans to expand its presence to 1,000 cafes by FY2027-28. D’souza stated, “That’s why we had made a very clear statement of intent by saying that we will get 1,000 outlets by FY28… nothing changes there. In the short term, we might moderate the number of outlet openings, but the 1000 target remains there, and we will be focused on that.”
Despite having over 500 outlets, Starbucks is still considered “significantly under-penetrated” in India compared to other countries with similar per capita income. D’souza noted, “It’s still a small market and has a long runway.” Tata Consumer Products also expects growth from its vending business, Tata MyBistro, which offers a variety of coffee, tea, and other drinks to institutional customers.
Tata Starbucks registers 12% revenue jump
Meanwhile, the company’s revenue from operations was up 12% to INR 1,218.06 crore in FY24. However, its loss for the period had widened to INR 79.97 crore from a loss of INR 24.97 in FY’23 due to expansion. D’souza said, “You have got to make sure you are within a particular range, especially on the store profit contribution. The total EBITDA is a different matter, because there are certain other investments and marketing, etc., capital that you will put in, but store profit contribution, that number we watch very very closely because the unit economics have to work when you scale.”
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Further, D’souza emphasised the importance of creating efficiencies in operations, which requires a network of five to ten stores in every city. He added, “As we go to tier II & III cities, bar a few exceptions, we are seeing the reception there, and the throughput that we get is almost equal to the metros.” According to D’souza, coffee is a huge opportunity in India, with the country being under-penetrated in coffee consumption. He said, “Coffee is a huge opportunity in India. India is an under-penetrated country in coffee and when you look at global trends, coffee is a faster-growing category than tea.”
