Starbucks To Double Stores In India As Coffee Consumption Booms

(Bloomberg) -- Starbucks Corp. plans to more than double its stores in India in four years, opening the equivalent of one new shop front every three days, as the country’s growing middle class fuels a boom in coffee consumption. 

The global coffee giant wants to operate 1,000 stores in India by 2028, and the focus will be in so-called tier-2 and tier-3 cities — those outside of its biggest metropolises, it said in a statement Tuesday. It will also expand drive-thrus, airports and 24-hour cafes, and expects its Indian workforce to double to 8,600.

While tea — particularly sugary, milky chai — has long been the hot beverage of choice in India, coffee drinking has grown increasingly popular as aspirational consumers flock to cafes. Along with Starbucks, high-end cafes and farm-to-cup local chains, such as Blue Tokai, have proliferated, selling beverages sourced largely from locally harvested crops.

“Over the past 11 years, the India market has grown to become one of Starbucks fastest-growing markets,” Chief Executive Officer Laxman Narasimhan, who is visiting the country this week, said in the statement. “With a growing middle class, we are proud to help cultivate the evolving coffee culture.”

Growth Ambitions

For Starbucks, the stronger push in India is part of broader ambitions to increase its foothold in some of the world’s most economically promising markets.

The company has operated in India since 2012 through a 50% joint venture with Tata Consumer Products Ltd., an arm of one of nation’s biggest conglomerates, and currently has 390 stores across 54 cities. In the quarter ended Sept. 30, a net 22 new Starbucks outlets were opened in India, according to Tata Consumer, with revenue growing 14% from a year earlier.

The target for 1,000 stores would make India one of the company’s major overseas markets, though dwarfed by the more than 6,500 stores in mainland China.

Indians typically prefer to drink instant coffee at home, and retailers are now targeting consumers to trade up to more gourmet varieties, according to the U.S. Department of Agriculture. Still, the premium market remains relatively small, accounting for about a third of total consumption, and demand may be hurt as higher prices see consumers rein in their spending, according to the agency. 

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