News » Tata’s Starbucks Venture Feels the Pinch As Indian Spending Declines

Tata’s Starbucks Venture Feels the Pinch As Indian Spending Declines

India’s Tata Consumer Products is all set to adjust its strategy related to the expansion of Starbucks locations soon as foot traffic to its cafes has diminished in the world’s most populous nation. This is known based on the statements that have been made by the CEO of the company on Monday. 

Urban consumers in India are tightening their budgets along with reducing expenditures on times such as coffee, cookies, and fast food mainly because of ongoing high inflation. It is impacting the financial capabilities of the middle class, whose earnings have not kept pace with the increasing costs. 

Tata Starbucks has joined hands with American coffee giant Starbucks and the Indian conglomerate boasting the largest cafe chain in India with around 450 locations. Globally, Starbucks has been operating in more than 40,000 stores. 

CEO of Tata Consumer, Sunil D’Souza in an interview with Reuters mentioned, “We will make adjustments for the short term… There will be challenges in the near future.” He focused on the fact that the Tata-Starbucks partnership remains committed to its ambitious target of reaching 1,000 stores by 2028. 

D’Souza despite the challenges faced right now has shown optimism about the long-term prospects of the coffee market in India. He noted that the country’s coffee culture is growing continuously and is on the rise and that the density of cafes is still low when compared to other Asian nations including Vietnam, the Philippines, and Indonesia.

In a separate comment, D’Souza has projected that the revenue of Tata Consumer would see a double-digit percentage increase in the latter half of the financial year. However, profits may encounter some pressure because of the growing raw material costs, especially for the tea. 

Tata Consumer refused to offer precise numbers. On average, four analysts who have been surveyed by LSEG have predicted that the revenue will increase by around 16% in the second half.

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