Starbucks, Tata ink deal for cafes in India

Starbucks Corp said it will open its first outlets in India in August or September and plans to have 50 stores in operation by the end of the year in a joint venture deal with Tata Global Beverages.

The formal launch of the company's retail foray into India comes a year after it signed a deal with Tata Global to buy coffee from India and open retail outlets in the country.

Starbucks and Tata Global, part of the salt-to-software Tata conglomerate, said they had formed an equal joint venture to run cafes and develop business in India.

The joint venture, Tata Starbucks Ltd, will set up Starbucks outlets across the country, starting with New Delhi and Mumbai, the partners said.

Starbucks opted for a partnership even after the Indian government eliminated restrictions on foreign investment in the single-brand retail sector earlier this month.

Tata Coffee, a unit of Tata Global, said separately that it had signed a deal to supply coffee to the joint venture.

India is the world's fifth biggest coffee producer, but now exports 70-80 per cent of production.

Western style cafes are popular with an increasingly urban population in India, where tea has traditionally been the beverage of choice.

The organized coffee market in India, which reflects consumption mainly through cafes, accounts for about $140 million of the country's annual coffee sales of about $667 million.

Starbucks has more than 5,500 coffee houses in more than 50 countries outside the United States; about half the number it has at home.

A cup of plain coffee typically costs about Rs 10 (about 22 US cents) at a basic restaurant in India, compared with Rs 60-80 at Western-style cafes, which began sprouting up a decade ago.

However, Starbucks has tough competition in India. Cafe Coffee Day, India's largest coffee chain, has nearly 1,200 outlets and plans to open one cafe every third day.

It is followed by the Barista chain, with more than 200 cafes. Barista also has huge expansion plans.

UK coffee retailer Costa Coffee, which entered the market in 2008, has about 75 stores and plans to increase this four-fold over the next three years.