Tata Starbucks bets on localised, smaller sized offerings amid aggressive expansion plans

“As we expand, we want consumers to find familiar things and then stay on for what we stand for as Tata Starbucks. For instance several customers told us food portions are too big, which defeats the purpose of them consuming it between meals. So now we’ve introduced 'bite sized' options," he said, adding that the creation of new occasions will provide growth and also fetch new customers.

The introduction of bite-sized food options and the Picco-sized beverage will be at a lower price point of Rs 160 an Rs 185 respectively.

“Having a smaller size does make us more affordable and the entry price point is now better. That does make us more attractive, especially when we go to new catchments (markets),” Dash added.

This is also significant as Tata Starbucks ramps up its store expansion, especially in smaller towns. Tata Consumer Products (TCPL) said during its March quarter results that Tata Starbucks is looking to rapidly expand its presence in the coming years.

Dash said that the expansion in smaller towns will continue with the most recent Tata Starbucks stores opening in Agra and Meerut. The coffee chain now has 341 stores across 43 cities, after expanding into 14 new cities last fiscal.

“The demand for Starbucks is huge across the board. Will continue to open as per requirement - wherever there is consumer demand, real estate, we will open stores,” he added.

Tata Starbucks posted net sales of Rs. 1,087 crore for financial year 2023, crossing the 1000-crore mark within a decade of its foray into India. The next leg of growth, Dash says, will come from the markets Starbucks is already present in.

“The headroom is huge. Coffee penetration in India is 1/10th of tea, giving us a large headroom for growth. As the economy grows, the younger generation comes in, I believe we will have headroom. And we will continue to expand to newer markets,” Dash added.

Starbucks expansion and growth plans also come at a time when competition in the coffee chain market is heating up.

Reliance Brands opened the first store of UK-based coffee chain Pret A Manger in India last month, with aggressive expansion charted out for this coffee chain. Meanwhile, Canadian Coffee Chain Tim Hortons, which opened its first store in Delhi last year plans to open 120 stores over 36 months.

Dash, however, doesn't seem worried about competition. “Competition is good, there is lot of headroom for the coffee market and competition will grow the category,” he said.