Expansion plans, new formats help Tata Starbucks grow 26% in Sep quarter

Seven years after its entry into India, Tata Starbucks' consumer connection score is at an all-time high

Amid an ongoing slowdown, Tata Starbucks – the 50:50 joint venture between Tata Global Beverages (TGBL) and US-based Starbucks Coffee — continues to grow its business. It posted 26 per cent revenue growth in the September quarter, backed by expansion in new geographies and growth in existing store sales.

As on September 31, 2019, Tata Starbucks’ total store count in India stood at 163 across 10 cities in the country and it forayed into Ahmedabad and Surat in Gujarat in August by opening five and three stores respectively.

According to an investor’s presentation by the company, its consumer connection scores are at an all-time high. The score is a measure which indicates the satisfaction level of the customer and the likeliness of the person coming back to the store again.

Tata Starbucks closed the last fiscal year at a store count of 146 stores across eight cities – an addition of 30 stores; and had entered Chandigarh in the last fiscal year. In the first quarter of the current fiscal year, it clocked a 23 per cent growth in its revenue and had taken the store count up to reach a total of 151 stores. During 2017-18, it had added 25 new stores.

“India is one of the fastest growing emerging markets for Starbucks globally. We believe we are building the business in the right way, being disciplined and positioning for long-term success. We are optimistic for the future, hence our accelerated growth plans with the recent city expansion to Ahmedabad and Surat”, a Tata Starbucks spokesperson told Business Standard.

So far in the ongoing fiscal year, Tata Starbucks has opened 17 new stores.

The company have been experimenting with three different store formats as part of its expansion strategy in the country. In cities where it is already present like Bangalore and Mumbai, smaller footprint stores were increased while new formats like the shop-in-shop store has been introduced in Westside in Bangalore. Another new format; the Highway stores was also experimented in the Mumbai-Pune and Bangalore –Tirupati highway.

The third format, which offers customers a better and richer experience, was introduced as high profile forward stores in the Vittal Mallya Road in Bangalore.

Such premium stores, according to the company, serves as the bridge to a unique sensorial experience. This format of store features two separate bars; an espresso bar, which can customise espresso, and a brew bar, which offers coffee aficionados a range of brewing techniques. It also has an affogato station, where ice-cream is combined with coffee to create a range of unique beverages.

According to Tata Starbucks, it will continue with the accelerated store growth and enter new cities while explore new store formats along the way. To boost the growth, its Indian parent, TGBL had invested Rs. 35.80 crore in the last fiscal year towards equity capital in Tata Starbucks.

In the last fiscal year, Tata Starbucks had posted a profit of Rs. 14.57 crore as against a loss of Rs. 15.23 crore during 2017-18.

	Growth percentage	Total number of stores
Q2 FY 2020	26%	163
Q1 FY 2020	23%	151
Q4 FY 2019	30% (annual growth rate 2018-19)	146
Q3 FY 2019	30%	136

Source – Tata Global Beverages