India: major international coffee players look to the Subcontinent

Interesting news is coming from the Indian coffee sector. Large international players in India are increasingly looking to the Subcontinent.

Barista Lavazza, the second-largest coffee retailer in the country, intends to target smaller Indian cities and is planning to open stores in cities identified as “Tier II,” through a franchise network (in India, cities are classified according to parameters regarding economy, industry, and investment: metropolitan cities are referred to as “Tier-I cities,” followed by “Tier-II” and “Tier-III,” depending on the level of services they can offer). Through this operation, 15-20 new outlets will be added.

“For the first time, we have decided to enter “Tier II” cities as well: the various cafes will also be located in the capitals of India's federated states,” said Nilanjan Bhattacharya, Lavazza's Barista Operations Director for India and SAARC regions. The chain currently has 160 stores in total, mainly in the Delhi-NCR region.

Meanwhile, Tata Starbucks, a 50:50 joint venture between Tata Global Beverage and Starbucks Coffee Company, has opened its first three stores in India, specifically two in South Mumbai and one in Mumbai. Howard Schultz, President and CEO of Starbucks, said that “despite the fact that it shapes up as a difficult market, especially in terms of entry, India currently represents, along with China, the main market in which the group intends to invest, with a clear long-term strategy.”.

India's large international players are traditionally known as big tea consumers, but coffee consumption has increased exponentially over the years, up 80% from a decade ago. Current turnover is around US$230 million, a figure that is set to grow by 13-14% annually over the next five years to reach US$410 million. There are currently 1950 stores in India, two-thirds of which have been added in the past five years. According to local sources, another 1,000 stores will be built in the next five years.

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