The recent leadership shake-up at Starbucks, which saw the removal of global CEO Laxman Narasimhan, will not impact the growth trajectory of Tata Starbucks in India, according to Sunil D’Souza, CEO of Tata Consumer Products. The coffee giant, which operates nearly 440 cafes in India through its joint venture with Tata Consumer, remains committed to its ambitious expansion plans.
Earlier this year, Starbucks announced its goal to open a new store every third day, aiming to reach 1,000 cafes in India by 2028. D’Souza reassured that these plans remain on track, with the main challenge being the availability of quality real estate for new outlets.
The leadership transition comes as Starbucks appointed Brian Niccol, CEO of Chipotle, as its new chairman and CEO. The company is looking to revive sales after reporting a decline in same-store sales for the first time in nearly three years. Globally, Starbucks saw a 1% drop in net revenue in the three months ending in June, while sales in India grew by 4%.
Despite this growth, Tata Starbucks reported a 12% increase in sales to ₹1,218 crore in FY24, though losses widened to ₹81.8 crore. The Indian market, which is still predominantly tea-drinking, presents unique challenges for coffee retailers. However, Starbucks remains optimistic about its future in India, even as new competitors like Pret A Manger, Tim Hortons, and Third Wave Coffee expand their presence.
Pret A Manger, in partnership with Reliance Brands, has opened 11 stores in India, with plans to launch up to 100 outlets in the next five years. Tim Hortons aims to establish more than 100 stores within three years, while Third Wave Coffee has already surpassed the 100-store milestone.
D’Souza emphasized that Tata Starbucks is fully committed to its Indian operations and views competition as a positive force that drives improvement. “We are building muscle and investing in this business,” he stated, underscoring the company’s long-term ambitions for India.
As coffee penetration in India remains low at around 25%, D’Souza noted that the market is still in the early stages of transitioning from tea to coffee, with a preference for blended beverages like frappuccinos over traditional espresso. Despite these challenges, Starbucks is bullish on its growth prospects in India, with all the necessary elements in place to accelerate its expansion further.