Despite facing pressures to adjust its global operations, Starbucks (SBUX.US) is accelerating its push into the Indian market. The coffee giant's joint venture with India's Tata Group, Tata Starbucks Pvt., plans to open between 50 and 100 new stores annually in India, aiming to capture the growth potential in the coffee market of the world's most populous nation.
Tata Starbucks CEO Sushant Dash stated in an interview that India is "one of Starbucks' fastest-growing markets globally." Over the past four to five years, the number of Starbucks stores in India has doubled to over 500, maintaining a market share of around 30%. This expansion shows no signs of slowing down.
N. Chandrasekaran, Chairman of Tata Group's Tata Consumer Products, recently revealed at a shareholder meeting that Tata Starbucks achieved a positive EBITDA in the 2026 fiscal year. Both joint venture partners believe the Indian market could ultimately support a network of approximately 8,000 Starbucks stores.
Pursuing Growth Despite Losses
Although Tata Starbucks is currently operating at a loss, CEO Dash made it clear that the company will not "sacrifice growth for profitability." Dash pointed out that only about 24% of India's population currently drinks coffee, compared to 93% who drink tea, indicating a significant opportunity for growth.
As incomes rise and consumption habits evolve, coffee consumption in India is steadily increasing. This has attracted intense competition from local chains like abCoffee and Blue Tokai, as well as numerous international brands.
To compete, Tata Starbucks has adopted a multi-format strategy, including drive-thrus, highway stores, pop-up shops, and experiential locations. It has also opened four Reserve stores offering premium coffee in Mumbai, Delhi, and Kolkata. Furthermore, a majority of Tata Starbucks' products are sourced locally, including espresso beans grown and roasted in India, which helps mitigate risks from global supply chain disruptions.
Expanding Against the Global Trend
Starbucks' aggressive expansion in India stands in stark contrast to its strategy in other global markets. The company is currently streamlining its U.S. operations while navigating consumer boycotts in markets like South Korea and the Middle East. Last year, it also sold a 60% stake in its China business.
Following this successful streamlining of its China operations, Starbucks appears to be turning its attention to the Japanese market. Reports indicate the company is considering significant strategic changes for its Japan business, with potential options including selling a partial stake or pursuing an IPO for the unit. The company has reportedly begun preliminary discussions with investment banks regarding these matters.
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