Aditya Kalra, Abhirup Roy

NEW DELHI (Reuters] – Starbucks (NASDAQ 🙂 aims for India expansion by opening smaller shops and driving-through outlets. The CEO of Starbucks’ local partner stated this Monday. It signals Starbucks’ bullish plans in India as COVID-19 slowdown continues.

Tata Starbucks was launched in India in 2012. It is a joint venture of Starbucks India and Tata Consumer Products India. There are 233 locations in 19 Indian cities.

Sunil D’Souza CEO, Tata Consumer Products said that both the partners are “inspiring Tata Starbucks” to become more aggressive with store openings and new formats.

D’Souza stated that all they need to determine is the speed at which we can scale. D’Souza said, “We have an opportunity to scale because there is competition.”

India is among the fastest-growing markets for Starbucks worldwide. Although tea continues to be more popular and affordable, there has been a surge in demand for coffee shops.

But, the fascination with coffee brands such as Starbucks and Costa Coffee is still high. Many Starbucks stores in India have large formats and richly wood-panelled décor.

D’Souza explained that now the company wants to explore smaller-sized outlets so they can open faster. It is also trying out concepts like drive throughs, having opened one in northern India last January.

Tata Starbucks saw a 128% increase in revenue during the September quarter, when it opened 14 more outlets.

“Am I satisfied with 14?” Absolute not. D’Souza added, “The target’s more.” He also stated that there was a goal to open around 40-50 outlets in the next year.

INFLATION PROBLEMS

Tata Consumer Products has a wide range of consumer products, including its salt- and tea brand and many other staples. Tetley is also a well-known tea brand.

Inflationary pressures triggered by an increase in prices have hit Tata as well as other rivals such as local units of Unilever (NYSE 🙂 or Nestle, as shipping and packaging costs have risen.

D’Souza expressed concern about rising raw-material and energy costs. Tata Consumer Products said it will control its marketing to mitigate the effects.

He said that “at least in the medium to short-term…we’ve got to accept it”, adding that the company will look at increasing prices to increase margins and reducing package sizes.

Tata Consumer Products will continue to focus its efforts on rural Indians, even as these issues weigh. It has been long-time focused on urban centres.

D’Souza stated that the company plans to increase its distribution network in rural areas by 20%. It will promote affordable brands and launch new products.