Seattle-based coffee retailer Starbucks has announced intentions to enter India more times than Lindsay Lohan has been arrested, Paris Hilton has been embarrassed or Elizabeth Taylor has been married. This time they may be for real.
I mocked lightly them in my 2008 book for vacillating on India. In 2007, they had announced the intent to enter India in partnership with Kishore Bayani’s Futures Group (the owners of Pantaloons and Big Bazaar). A year ago, the Economic Times of India reported that the company was in advanced discussions with Hari Bhartia’s Jubilant conglomerate (whose Jubilant Foodworks is the India franchisee for pizza-maker Dominoes).
Tata Coffee, one of the biggest suppliers of Arabica coffee beans, has shipped coffee beans to Starbucks in the past and is now building a structure for a long-term relationship, a joint release from the Tata group and Starbucks said. Tata also owns Eight O’Clock Coffee in the United States. According to the MoU, the two companies will collaborate on providing training to local farmers, technicians and agronomists to improve coffee-growing and milling skills. According to the Business Standard, Tata Coffee is Asia’s largest coffee plantation company and the third-largest exporter of instant coffee in the country. It produces more than 10,000 tonnes of shade grown Arabica and Robusta coffees at its 19 estates in south India.
Howard Schultz, Starbucks chief executive, said the possibilities in India match those in China, where it has outlined the goal of trebling branch numbers to around 1,500 in five years.
But Schultz is going to face stiff competition from foreign companies such as Barista and Costa Coffee and even more so from India’s strongest chain, Cafe Coffee Day. It has more than 1,030 coffee shops in 175 towns all over the country. Growing at over 30 percent per year, the company is a favorite of India upwardly mobile youth. Call Centers and IT companies feature vending machines with its coffee (over 15,000 machines at more than 3,000 companies at last count).
V.G. Siddhartha, the founder of the company grew up on a coffee plantation and presently is the personally second largest owner of coffee growing farms in India, next to Tata Coffee. He is profiled in the Financial Times last week. I was impressed when blue chip Silicon Valley venture capitalist Sequoia Capital put in $20 million into Siddartha’s holding company in about 2002. But last year, they received a much larger check from Wall Street’s private equity player, Kohlberg Kravis Roberts, $200 million; which will enable the company to double its store count in three years.
It’s going to Pepsi vs Coke in India as the two chains duke it out. Stay tuned.
Last updated: December 26th, 2025
