KOLKATA/MUMBAI: The buzz so far is that US chain Starbucks Coffee is in advanced talks with few Indian retailers including C Sivasankaran’s Sterling Infotech, which runs the Barista chain in India.
Though whiffs of such a brew are still very faint and no official confirmation available from Barista either, sources in retail industry suggest that a Starbucks tie-up with an Indian retailer could substantially bring down the entry cost for the international coffee retailer as rent or ownership cost of outlets on city high streets could be prohibitive which initial footfalls may not justify.
In fact, Starbucks’s joint ventures or licenced franchisees outnumber company-operated retail outlets globally.
While the coffee retailer has 1,049 company operated outlets in Australia, Canada, Germany, Singapore, Thailand and the US, there are 1734 outlets in countries like China, South Korea, Turkey, Phillippines, Mexico and UAE that are run through joint ventures or licensing agreements.
Sources said Starbucks could position itself better in India, a predominantly tea drinking nation, by leveraging trademark tea brands like Tazo Chai Tea, a spiced up version of black Indian tea, Tazo Black Iced Tea and Tazo Green Iced Tea, while Indian coffee retailers are limited with just coffee offerings.
The Indian tea industry is keeping a very interested eye on Starbucks’s moves because it reckons that with its branded tea offerings it would be well-placed to tap the rising per capita tea consumption in the country which has increased to 733 grams per annum in 2005 from 650 grams per annum in last calendar. The tea industry’s interest is much more than just a passing one. More so since tea exports is expected to be down 25-30 million kgs in 2005.
According sources, the Indian tea industry is looking forward for the possibility of a Starbucks-Tata Coffee kind of a deal where the international coffee retailer had entered into a long-term agreement last year, to buy coffee beans from the Tata company at a hefty premium of about 40%.
If the Howard Schultz company does enter into a joint venture or licensing agreement with Indian retailers, it would also enable the latter to tap increasing opportunities in tea and usher in the trend of branded tea brews in India, sources said.