Starbucks to enter Indian market in joint venture

MUMBAI, India -- Starbucks (SBUX) will open its first outlet in India by September through a 50-50 joint venture with Tata Global Beverages, the companies said Monday.

"We're going to move as fast as possible in opening as many stores as we can so long as we are successful and so long as we are embraced by the Indian consumers," said John Culver, president of Starbucks China and Asia Pacific.

The first store is likely to open in Mumbai or New Delhi, with a nationwide rollout to follow, the companies said.

R.K. Krishnakumar, vice chairman of Tata Global Beverages, said the venture could have 50 stores open by year's end.

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The companies said the initial investment will be 4 billion rupees ($80 million).

Unusually, the stores will be cobranded "Starbucks Coffee: A Tata Alliance."

The two companies will also develop a tea for the Indian market under the Tata Tazo brand.

Starbucks currently operates over 17,000 stores in 57 countries.

Last January, Starbucks signed an agreement with Tata Coffee, a unit of Tata Global Beverages, to source and roast coffee beans in India.

The alliance with Tata could help ease one of the main burdens for retailers in India: the high cost of real estate.

Krishnakumar said the joint venture would open outlets at properties owned by group companies, for example at the Taj chain of luxury hotels.

Culver said the company would also look at opening outlets in shopping malls, office parks, universities, airports and train stations.

The alliance will also help Tata Global Beverages expand its international footprint. All coffee beans for the cafes in India will be sourced from Tata Coffee, which also hopes to ramp up exports to regional Starbucks outlets, Krishnakumar said. He said other Tata Beverage brands, like Himalaya water, should also find their way into Starbucks outlets globally.

The venture will face competition from existing players like market leader Cafe Coffee Day, which operates over 1,200 outlets in the country.