India: major international coffee players look to the Subcontinent

Interesting news is coming from the Indian coffee sector. In India, major international players are showing increasing interest in the subcontinent.

Barista Lavazza, the second largest coffee retailer in the country, intends to focus on smaller Indian cities and is planning to open stores in cities identified as “Tier II” through a franchising network (in India, cities are classified based on economic, industrial, and investment parameters: metropolitan cities are designated 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've decided to enter “Tier II” cities as well: various coffee shops will also be located in the capitals of Indian federal states,” said Nilanjan Bhattacharya, Chief Operating Officer of Barista Lavazza for the India and SAARC regions. The chain currently has 160 stores in total, mainly in the Delhi-NCR region.

In the meantime, Tata Starbucks, a 50:50 joint venture between Tata Global Beverage and Starbucks Coffee Company, has opened its first three outlets in India, specifically two in South Mumbai and one in Mumbai. Howard Schultz, Chairman and CEO of Starbucks, stated that “although it presents a challenging market, especially regarding entry, India, along with China, currently represents the main market in which the group intends to invest, with a precise long-term strategy.”.

India, a major international player, is traditionally known as a major consumer of tea, but coffee consumption has grown exponentially over the years, with an 80% increase compared to a decade ago. Current revenue stands at around $230 million, a figure expected to grow by 13–14% annually over the next five years, reaching $410 million. There are currently 1,950 retail outlets in India, two-thirds of which have been added in the last five years. According to local sources, another 1,000 stores will be built over the next five years.

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