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Tata Consumer Products has strongly refuted a recent report claiming that Starbucks is planning to exit the Indian market due to high costs, losses, and growing competition from local coffee chains. The report, published on December 19 by Rajasthan-based media outlet The Philox, suggested that Starbucks could soon shut down operations in India, citing price-sensitive Indian consumers’ preference for cheaper local substitutes and the coffee chain’s struggle to turn significant profits in the country.
In a statement issued to three major Indian stock exchanges, Tata Consumer Products dismissed the allegations, calling the report “baseless” and stating that there were no plans for Starbucks to exit the Indian market. The company emphasized that its joint venture with Starbucks, Tata Starbucks Private Limited, remains strong, and the partnership continues to be guided by shared values and a commitment to India.
Despite the clarification, the report raised concerns among some observers about Starbucks’ profitability in India. The company has faced challenges in the Indian market, where its premium pricing has not always resonated with a large segment of the population. Additionally, rising operational costs and increased competition from local coffee chains have further complicated its business model.
Starbucks entered India in 2012 through its partnership with Tata Consumer Products, and over the years, it has expanded its presence with hundreds of stores across major cities. However, the company has not been immune to financial challenges. Tata Starbucks reported a widening loss of ₹81 crore for the fiscal year 2024, although revenue from operations grew by 12%.
The timing of the Philox report coincided with Starbucks India’s confirmation that it would delay some planned store openings, further fueling speculation about the coffee chain’s future in the country. While Tata Consumer CEO Sunil D’Souza confirmed the delay in store openings, he assured that the decision was driven by fewer customers visiting Starbucks cafes, rather than any long-term plan to exit the market.
Tata Consumer reiterated in its letter to the stock exchanges that its partnership with Starbucks remains intact and that the company is committed to growing the Starbucks brand in India. The clarification came after some confusion and concern over the future of the coffee giant’s operations in the country.
In response to the Philox report, Tata Consumer underscored that no official statements have been made by either company regarding an exit from India, and reports of such a move were entirely unfounded.
As Starbucks continues to navigate the challenges of the Indian market, the company’s relationship with Tata Consumer Products remains a key part of its strategy for the country. Despite financial setbacks, Starbucks’ strong brand presence in India suggests that the coffee chain will continue to play a significant role in the Indian coffee culture for the foreseeable future.
Sources By Agencies
