According to its MD and CEO, Sunil D’souza, Tata Consumer Products sees great potential in the Indian coffee market and will concentrate on expanding cafes under its joint venture, Tata Starbucks. By FY2027–2028, Tata Starbucks—a 50:50 joint venture between Tata Consumer Products Ltd (TCPL) and Starbucks Corporation—aims to have 1,000 locations.
As of the September quarter, the JV operated 457 outlets across 70 locations. Additionally, TCPL anticipates development from its vending company, Tata MyBistro, a relatively new player in the market that primarily serves institutional clients with a range of coffee, tea, and other drinks. “We make it evident that Starbucks has no problem with retail profitability. Additionally, we are certain that we can profit as we grow,” D’souza told PTI.
Although it is “significantly under-penetrated” compared to nations with comparable per capita income GDP, Starbucks has grown to become the leading coffee business in the nation with over 500 locations. He said it has a lengthy runway and is still a tiny market. “There is no change in our clear goal declaration, which said we will have 1,000 shops by FY’28. We may limit the number of outlets that open in the near future, but we will continue to work on reaching the 1000 objective,” he stated.
In FY’24, Tata Starbucks’ operating sales increased by 12% to Rs 1,218.06 crore. However, because of the expansion, its loss increased from Rs 24.97 crore in FY’23 to Rs 79.97 crore. “You must ensure that you fall within a specific range, particularly about the shop profit contribution. We pay special attention to the store profit contribution because unit economics must function as you grow. Still, the overall EBITDA is a different story since you will also need to make certain additional expenditures and capital for marketing, etc.,” he added.
According to financial information obtained through the business intelligence portal Tofler, Tata Starbucks’ advertising and promotional costs increased by 26.8% to Rs 43.20 crore, while its royalty was Rs 86.15 crore. Additionally, D’souza stated that a network of five to ten stores in each city is required to increase operational efficiency.
“So now you will see a slight bit of an increase in the number of cities, but I more you will see us populating the same densities,” he continued. As we go to tier II and III cities, bar a few exceptions, we are seeing the reception there, and the throughput that we get is almost equal to the metros.” The goals of young people in such tiny tier II and III locations are now the same as those of a metro.
“In India, coffee presents a significant opportunity. “When you look at global trends, coffee is a faster-growing category than tea, and India is an under-penetrated country in terms of coffee,” D’souza stated. That concept is gaining traction in India both at “home” and “out of home,” mostly at TataStarbucks. D’ouza anticipates that TCPL’s coffee business will “continue to grow at that pace” after seeing 25–29% growth in the previous quarter.
D’souza claims that whereas coffee is only about Rs 3,000 crore and is growing more quickly, tea is worth Rs 25,000 crore in India. According to Tata MyBistro D’ouza, a vending company, “Convenience will be a trend going forward.” If you marry both of them, a coffee vending machine that serves tea at your office or place of employment is likely to be a big business in the near future. There’s no reason why we can’t take part.
However, he noted that MyBistro has only touched around 2,000 of the estimated 1.5 to 2 million coffee vending machines in India. “We still have a long way to go, but trust me when I say that magic is possible if you deliver high-quality service under the Tata brand. Therefore, we are concentrating on this,” he stated, adding that a “much wider portfolio” for various food and drinks would become possible due to this vending machine company.
