Amid gloom, Starbucks looks towards India with optimism

Firm to ramp up its tea offerings with the launch of Teavana in India this year

When Starbucks Chairman and Chief Executive Howard Schultz began his Thursday morning, little did he know that a series of blasts near a Starbucks cafe in Jakarta, Indonesia, would rattle his day.

The 62-year-old, one of America Incorporated's most high-profile executives, was candid enough to admit in an address to top Tata Group officials in the city, that he was saddened and concerned about the turn of events in Jakarta. However, credit goes to him that he did not allow his India plans to be affected by this.

INDIA FIRST

• Starbucks global chairman Howard Schultz says that India’s size in the coming years will rival some of Starbucks’ other key markets across the world
• Focus on millennials will grow. India with its 65% under-35 population will be key in implementing this strategy
• Firm to strengthen digital & mobile delivery systems
• Starbucks likely to get its consumer products business into India

Schultz, on his second visit to India in three years, reiterated that the domestic business would be a major one for the coffee chain in the coming years. "I look at India with great optimism. I think Starbucks will have a major business in India, that is much larger than it is today in terms of number of stores. In 2015, we opened 1,800 stores across the world; India included. In 2016, we will open up pretty much the same number," Schultz said, indicating the aggressive approach the world's largest coffee chain will take to store expansion this year.

While India has close to 80 Starbucks stores in six cities, the plan is to touch 100 this year. Starbucks, for the record, has a joint venture with Tata Global Beverages in the country. The joint venture narrowed its losses nearly 10 per cent in 2014-15 and saw revenue touch Rs 172 crore from Rs 95 crore the previous year.

Schultz said, "I was clear, when we were looking to come to India, that if we could not make an agreement with the Tatas, we were not going to do business here."

Starbucks is also expected to ramp up its tea offerings within its domestic stores, introducing its global tea brand Teavana in the country this year. Stand-alone Teavana stores will come later.

"Tea is an over $100-billion category, much bigger than coffee, and we will bring Teavana to India in 2016," Schultz said.

To give the coffee culture a fillip, Starbucks will increase its focus on millennials - a target group it is increasingly homing in on across the globe. India with a 65 per cent under-35 population is an apt market, Schultz says, for its millennials-centric strategy. "We will bring our learnings in digital and mobile this summer into India, which we see as a game changer," Schultz said.

Starbucks' millennials-centric focus will also see it strengthen its digital and mobile delivery systems. Parallely, the coffee chain is also expected to bring its consumer products division into the country - tying up with Tatas for the same.

"We should have a significant business with other channels of distribution. This includes our consumer products as well as products from Tata," Schultz said. "The number of people in India that are rising to a level of middle class is growing," he said. "And if I look at the opportunities here, I think they are quite significant," he added.