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Starbucks and Costa Coffee gain ground in India

The US and UK-based coffee chains appear to be gaining momentum in India as premium coffee and café culture grow in popularity

A Starbucks store in Mumbai, India | Photo credit: via Shutterstock



Starbucks and Costa Coffee are making progress in India according to the latest results from their  respective licensees, Tata Starbucks and Devyani International Limited (DIL).
 
Reporting its results for the quarter ended 31 December 2021, Tata Starbucks said revenues had increased 37% compared to the same period in 2020. The company opened 13 new locations during the period and now operates 252 stores across the country.
 
“There has been strong sequential recovery in revenue since the opening up post second wave of Covid, but the third wave is posing some operational challenges,” said Tata Consumer Products in reference to its Starbucks business.
 
In November 2021, Tata Consumer products Managing Director, Sunil D'Souza indicated that smaller stores would be critical to Starbucks’ growth in India, with the Seattle-based coffee chain opening its first Indian drive-thru location and delivery playing a greater role in its business.
 
Meanwhile, UK-based competitor Costa Coffee is also gaining momentum in India. Reporting its third quarter results ended 31 December 2021, franchisee DIL said Costa’s revenues grew 88% year-on-year to reach Rs 143m ($1.9m), with the coffee chain opening 18 net new stores over the period to reach 50 stores across the country.
 
DIL has been the franchise partner for Costa Coffee since 2005 and in August 2021 extended its agreement with the Coca-Cola-owned coffee chain for a further five years.
 
Like China, India’s growing middle class and appetite for aspirational western brands is generating lucrative opportunities for hospitality businesses across the country.

In December 2021, Italian coffee giant Lavazza partnered with Tata CLiQ Luxury to sell premium coffee products online.
 
In a further sign that premium coffee and café culture is gaining traction in India, in November 2021, domestic specialty coffee chain Third Wave Coffee secured $6m investment and is targeting 300 stores by 2023.
 
Fellow Indian coffee chain Hatti Kaapi, which operates around 115 outlets in India, also attained new investment in 2021, securing $1.4m to grow its store portfolio in September 2021.

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