Starbucks Makes India Push With Expansion of Roasting Capacity

  • Chain has expanded to 84 cafes in the country since 2012
  • Company will introduce first single-origin coffee out of India

Starbucks Corp. wants to go big in India.

The world’s largest coffee chain, which has fewer than 100 cafes in the world’s second-most populous country, is expanding its roasting capacity in India as it seeks to open a spate of new stores in coming years. Starbucks also will start selling Indian coffee at its Reserve Roastery and Tasting Room in Seattle in a bid to expose U.S. customers to beans grown in the country’s Coorg region, said John Culver, president of Starbucks’ China and Asia Pacific Region.

“People look to us for coffee leadership,” Culver said. “Our customers want that exploration of flavors from all parts of the world, and this is just one step in that direction.”

Starbucks has been pursuing growth across the globe as the U.S. becomes increasingly saturated with its cafes. The Seattle-based company is investing money to expand in South Africa, China and Colombia, and also is planning its first Italian location for 2017.

India has become Starbucks’ fastest-growing market since the first cafe opened in 2012 in a partnership with Tata Global Beverages Ltd. Since then, the chain has expanded to 84 locations across six cities there. Starbucks said India will be among its five largest markets in the long term. To crack that list, India will have to surpass the U.K., where Starbucks currently has 870 cafes.

Consumer Excitement 

India “is growing faster on a percentage basis than any other region in the world,” Chief Executive Officer Howard Schultz said on a conference call in January. “We saw firsthand the excitement consumers have for the Starbucks brand.”

Starbucks is planning to introduce the first single-origin coffee from India under its premium Reserve label. Culver said the company worked with Tata over the last few years to improve the quality of the Indian coffee it plans to import. Coffee culture is starting to mimic that of wine, with discerning drinkers curious about the nuances in tastes and flavor from beans grown in different parts of the world, he said.

The company’s China and Asia Pacific unit generates about 13 percent of total revenue. Starbucks plans to open about 900 new locations in the region in the current fiscal year, compared with just 700 additions in the Americas segment, and 200 in Europe, the Middle East and Africa. Starbucks has more than 2,000 cafes in China alone and is opening about 500 new stores a year in the country. Culver said the company’s growth in India over its first four years in the country has been faster than during the same period in China.

“It’s a complex market, but we feel we’ve created a unique premium coffee experience that has not existed there,” he said.

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