India's Tata faces pressure in Starbucks joint venture as consumers cut back (updated)

Tata Consumer Products

16/12/2024 10:10

(Adds background, executive comment in paragraphs 2, 3, 4 and
6)
       Dec 16 (Reuters) - India's Tata Consumer Products
 TACN.NS  "will calibrate" its plans to open Starbucks stores in
the near term at a time when fewer customers are walking into
its cafes in the world's most populous country, its top boss
said on Monday.
    City dwellers in India are cutting spending on everything
from cookies and coffee to fast food as persistently high
inflation squeezes middle class budgets, with wages failing to
keep pace.
        Tata Starbucks, a joint venture between U.S. coffee
brand Starbucks  SBUX.O  and the Indian conglomerate, operates
the largest cafe chain in the country with more than 450
outlets.
        Starbucks has more than 40,000 stores globally.
  
    "We will calibrate for the short term ... In the near term
there will be pressure," Tata Consumer CEO Sunil D'Souza told
Reuters, adding that its Tata Starbucks joint venture is still
focused on reaching its 2028 goal to operate 1,000 stores by
2028.
    However, Tata Consumer's CEO still expects its bet on coffee
to pay off in the longer run as the country's coffee culture
grows and cafe density is still low compared with other Asian
countries such as Indonesia, Vietnam and the Philippines.
    Separately, D'Souza also said Tata Consumer's revenue would
increase in the double-digit percentage range in the second half
of the financial year, with profit coming under pressure due to
higher prices of raw materials, including tea.

 (Reporting by Praveen Paramasivam, Editing by Louise Heavens)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))