Tata Consumer Products (TCPL) sees significant growth potential in the coffee sector in India and plans to expand its café business through its joint venture with Starbucks, Tata Starbucks, according to MD & CEO Sunil D’souza. The 50:50 joint venture between Tata Consumer Products Ltd and Starbucks Corporation currently operates Starbucks cafés across India and aims to increase its outlets to 1,000 by FY2027-28.
Tata Starbucks Growth Plans
Tata Starbucks, which began as a collaboration between Starbucks and Tata Consumer Products in 2012 under Ratan Tata’s leadership, has successfully adapted its offerings to Indian tastes. The JV has grown to operate 457 stores in 70 cities as of the September quarter. D’souza emphasized that while Starbucks has over 500 outlets and is now the largest coffee chain in India, the market remains “significantly under-penetrated” compared to other countries with similar GDP per capita. As a result, the company remains confident that the coffee business has a long growth trajectory in India.
“We have a clear goal to reach 1,000 outlets by FY28, and while we may moderate the pace of openings in the short term, this target remains firm,” D’souza stated. The company is focused on scaling operations and achieving profitability as it expands.
Tata Starbucks Revenue and Losses
In FY2024, Tata Starbucks reported a 12% increase in revenue, reaching Rs 1,218 crore. However, its losses widened to Rs 79.97 crore from Rs 24.97 crore in FY2023, primarily due to the costs associated with expansion. Despite this, D’souza is confident that store profitability will improve as the chain scales. “We closely monitor store profit contribution and unit economics, as these will be crucial for long-term success,” he explained.
Focus on Operational Efficiencies
To improve operational efficiency, D’souza noted that Tata Starbucks plans to expand its store networks within cities, with a target of having five to ten stores in each city. The company is also focusing on increasing store density in both metros and emerging Tier II and III cities. “The reception and throughput in smaller cities are almost on par with metro areas, reflecting a shift in consumer aspirations,” he added.
Coffee’s Growth Potential in India
India remains an under-penetrated market for coffee, which presents a significant growth opportunity for Tata Starbucks. D’souza highlighted that while the tea category in India is worth Rs 25,000 crore, coffee is a smaller but rapidly growing Rs 3,000 crore category. “Coffee is a huge opportunity in India, and global trends show it is growing faster than tea,” he said. TCPL’s coffee business grew by 25-29% in the previous quarter, and D’souza expects this growth to continue at the same pace.
Vending Business: Tata MyBistro’s Expansion
In addition to cafés, Tata Consumer Products is also betting on its vending business, Tata MyBistro, which offers a variety of coffee and tea drinks to institutional customers. The vending segment is seen as a major opportunity as workplace convenience continues to be a growing trend. Currently, there are 1.5 to 2 lakh coffee vending machines in India, and Tata MyBistro has about 2,000 machines installed.
D’souza is optimistic about the growth potential of the vending business, stating, “With the Tata brand name and a focus on quality service, there’s great potential in this segment.” He believes that as the company expands its vending network, it will open doors to a broader portfolio of food and beverage offerings.
Tata Consumer Products sees coffee as a key growth driver in the Indian market, with both its café and vending businesses poised for expansion. As the coffee culture continues to grow, the company is focused on scaling its operations, improving profitability, and tapping into a market that is still in its early stages of development. With a clear strategy in place, TCPL is confident that it can play a leading role in shaping India’s coffee landscape.
