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Tata Starbucks posts 30% jump in FY19 sales on store additions



Mumbai: Tata Starbucks, a joint venture between the Tata Group and Starbucks, expanded sales by 30% in FY19, helped by the addition of new outlets as demand for quality beverages increased in Indian metro cities.

The JV posted sales of Rs 346 crore in FY18, according to data gathered from the Registrar of Companies. Back-of-the-envelope calculations show revenue at about Rs 450 crore during the last fiscal. Tata Starbucks added about 30 stores last year and now it has a store count of 146. The Seattle-based coffee chain opened 15 cafes just last quarter and about a third of its overall store network is in Mumbai.

Tata Global Beverages, in its latest investor report, said Tata Starbucks made profits at store level and all cities were profitable. “Double digit top-line growth for the full year was driven by new stores and improved store performance,” the presentation said.

Starbucks, which started operations in India in October 2012, recorded the fastest store expansion in the company’s 48-year history in the initial few years. But with 1,750 cafes, rival Cafe Coffee Day is still by far the market leader in the cafe market and has posted 10-11% samestore sales growth over the past three quarters. Within the quick service restaurant space, Burger King outsold Starbucks in FY18. Burger King entered India in 2014.

For global coffee chains including Starbucks, consumers are used to a takeaway culture, which helps them add margins at very little cost.

In India, however, office-goers and students go to cafes to relax and spend hours over coffee and snacks. Real-estate costs in India are high, making it important for retailers that average price realisation per square foot of space is adequate to make sales profitable.

“The strong double-digit growth in the Tata Starbucks JV should remain driven by the improved in-store performance with 25% store-level margins and new store rollout of about 40 additions annually,” wrote Himanshu Nayyar and Poorvi Khandelwal, analysts at Systematix Investments.

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