Tata Consumer Denies Claims of Starbucks Exiting India as "Completely False"

On December 19, Tata Consumer Products Ltd issued a statement to CNBC-TV18, denying the rumors that Starbucks was planning to exit India. The company dismissed the claims as "completely false and baseless." Tata Consumer also reaffirmed its strong relationship with Starbucks, highlighting their shared values and commitment to continuing operations in India.

Strong Partnership Between Tata and Starbucks

Tata Consumer emphasized that its joint venture with Starbucks, Tata Starbucks, remains robust. The partnership continues to thrive, with a clear focus on growth in the Indian market. Tata Consumer reassured investors and the public that the collaboration would persist and that reports suggesting otherwise were inaccurate.

Tata Consumer's Stock Performance

On December 19, Tata Consumer’s shares saw a slight rise of 0.5%, trading at Rs 914.75 per share at 10:40 am. Despite the negative rumors, the stock performance indicated positive investor confidence in the company’s future.

Tata Starbucks’ Market Position and Performance

Tata Starbucks, a joint venture between the US-based Starbucks and the Indian conglomerate Tata, operates the largest cafe chain in India, with more than 450 outlets across the country. The company’s sales saw an increase of 12%, reaching Rs 1,218 crore in the last financial year. Despite the growth in sales, the company did experience a widening net loss, which grew from Rs 25 crore to Rs 80 crore. In the first half of this year, the revenue increase was modest.

Revenue Growth and Market Outlook

According to Tofler, a business insights provider, Tata Starbucks' revenue more than doubled over the past four years, indicating significant progress in expanding its footprint in the country. This long-term growth reflects the rising popularity of coffee in India, a market still relatively untapped compared to other Asian nations like Indonesia, Vietnam, and the Philippines, where coffee culture is more ingrained.

CEO’s Long-Term View on Coffee Business

Tata Consumer’s CEO expressed confidence that the company’s coffee business would pay off in the long term. Despite short-term losses, the company is betting on the growth of India’s coffee culture, which is still in its early stages. The CEO believes that with low cafe density in India compared to other Asian markets, there is significant room for expansion and growth in the sector.

Tata Starbucks’ Expansion Plans

Tata Starbucks has been preparing for further growth by strengthening its team dedicated to planning store openings. The company is keeping an eye on upcoming real estate developments and has been proactively shortlisting new locations for future cafes. This approach reflects the company’s strategy to secure prime locations ahead of competitors, ensuring continued success in India’s coffee market.

Conclusion

Tata Consumer's firm denial of rumors about Starbucks exiting India reinforces the strength of the longstanding partnership between Tata and the global coffee giant. Despite some challenges, such as a widening net loss and modest revenue growth in the first half of the year, Tata Starbucks continues to expand its presence in the country, with plans to open more stores and leverage India’s growing coffee culture. The company’s strategic focus on long-term growth, bolstered by a robust market position and proactive expansion efforts, positions Tata Starbucks for continued success. As the coffee market in India matures, Tata Consumer remains optimistic about the future of its coffee business, signaling confidence in the sector’s potential.