New Delhi, India – Starbucks Corp., the world’s biggest coffee-shop chain, will enter India by tying up with Kishore Biyani, head of the country’s biggest publicly traded retailer, and V.P. Sharma, president of the U.S. company’s Indonesian franchise.
Starbucks will form a venture with New Horizons, a joint project 51 percent owned by Sharma, president director of PT Mitra Adiperkasa, and 49 percent held by Biyani, founder of Pantaloon Retail India Ltd., Sharma said in a telephone interview Wednesday. He declined to provide financial details or say how much of the venture the Seattle-based company will own.
Aiming to more than triple its number of stores to 40,000 worldwide by expanding into fast-growing markets such as China and Brazil, Starbucks will compete with local chains such as Barista Coffee Co. and Cafe Coffee Day in India.
McKinsey & Co. estimates there will be 351 million middle-income Indians in 65 million households by 2010, up from 40 million households now.
“It’s a status symbol to have a Starbucks cup in your hand in these countries like China, and I think that’ll translate to India as well,” said Rick Drake, director of research at ABN Amro Asset Management Inc. in Chicago, which manages $1.3 billion in assets, including Starbucks shares. “More Indians are working these professional jobs that give them more disposable income. Starbucks is an inexpensive status symbol and an inexpensive luxury.”
Starbucks’ venture with New Horizons will open its first store in New Delhi by the end of the year, Sharma said. Biyani didn’t return phone calls. The venture needs approval from the Indian government.
The chain now has 12,440 stores worldwide and is opening six stores a day, chairman Howard Schultz said in an interview last month. Starbucks will eventually open as many as 1,000 stores in Asia’s fourth-largest economy, he said.
“When you look at that market and couple it with China, those are two places that Starbucks can continue to grow for a long time,” Schultz said. “That’s why we feel so confident about the ultimate growth rate for the company continuing.”
Starbucks’ U.S.-based spokeswoman May Kulthol on Wednesday declined to confirm the coffee chain was in talks with Pantaloon Retail and Mitra Adiperkasa.
“We are excited about the great opportunities that India presents,” Kulthol said. “We target opening the doors of our first store in India with a yet-to-be-announced joint-venture partner by the end of 2007 in either New Delhi or Mumbai.”
