From airports to highways, what's driving Starbucks' expansion and growth in India?

"We are more confident about our acceptance with the consumer. This is why we have also expanded to even the smaller markets," says Sushant Dash, CEO, Tata Starbucks Image: Madhu Kapparath

Tata Starbucks will be celebrating 10 years in India this year. With a growing base of coffee enthusiasts across the country, the brand is also aggressively expanding its footprint and launching stores in newer markets. The company has increased its presence at airports in the country and has also upped its delivery game. It recently announced a partnership with designer Sabyasachi Mukherjee to launch limited-edition merchandise. Storyboard18 caught up with Tata Starbucks CEO Sushant Dash on the sidelines of this announcement, where he spoke about the company’s expansion strategy, new initiatives and the brand’s affordability factor.

Edited excerpts.

Q. Tell us about the brand’s association with Sabyasachi for the limited-edition merchandise line. And typically how do such collaborations work for the brand?

We were looking at collaborating with someone who brings Indian tradition but does it in a modern way. And we wanted to do it with a brand that brings to the consumer something special. But more importantly, we also wanted to do it with a purpose.

The idea was not just to look at it as a merchandise collaboration but do it for a certain purpose. That is something we at Starbucks have always believed in and is a part of our philosophy. One of the things we have been working on is the education of the girl child. We have been associated with the cause for the last three years. Diversity and inclusion are important facets of what we do. We have promised that 40 percent of our workforce will be women. We are one of the first QSRs to have 100 percent pay parity. So it was important to take this forward and also important to give back to the community to educate girls. Through this collaboration, we are actually doing that. Part of the proceeds will be for a purpose.

Q. Tata Starbucks will be celebrating 10 years in India this year. Tell us about the journey so far. How has the brand evolved?

The journey has been phenomenal. I don’t think when we started we would have expected the brand to have this kind of acceptance. We knew there was latent demand. Starbucks was an international brand; it was aspirational. But today, the fact that we are there in 27 cities in the country, have over 270 stores, and the kind of business that we have managed to establish, I didn’t actually think we would do it in 10 years.

Q. Even when you saw that queue outside the store on the launch day 10 years ago?

(Laughs) It did give you confidence and made you feel good, but to sustain that for 10 years and to continue to grow and to have the same kind of love across, even beyond the metros, gives you a real thrill in some ways. And the brand today has become an integral part of what this country is.

Q. What is triggering the expansion and what is the way forward?

We are expanding, and the last 12 months have been particularly good. We opened 50 stores in the last financial year. I think there is potential and we are now confident. We have been there for 10 years. We know what it takes to succeed. We are more confident about our acceptance with the consumer. This is why we have also expanded to even the smaller markets, which may be 5 years back we would have hesitated to enter. Wherever there is a consumer for Starbucks, the idea is we will go there. Other than that, the challenge is real-estate. You need to get the right kind of real estate that does justice to the brand.

Q. You have worked on both the coffee and tea sides of the business. What are the trends that are redefining the beverage business?

As Indians, we love our food and drinks. And we are willing to experiment. In general, food and beverages is a growth industry. QSRs are growing. So we are in a good place from both parts of it. If you ask me, tea remains the fundamental beverage in this country. When I say tea, it is the kadak Indian chai that people like. That is what you still drink, even at home, twice a day. But what is happening is people are willing to experiment. They are looking at other beverages in between and there are newer beverage occasions that are happening. And in many cases, in some of the evolved cities, with consumers who have been exposed, coffee is again becoming a habit. And I am talking about the non-south markets. In South India, of course, coffee has always been an integral part of their drinking habit.

Q. Along with the expansion and going to newer markets, is Starbucks working towards making the offering more affordable to the Indian consumer?

Affordability is a question of value. I think one of the things that I have realised in my many years of working in the Indian market across FMCG and retail, is that it is not the price point, it is the value that you are bringing to the table. As long as we bring that value in terms of the warmth, the connection, the ambience, and the accompaniment in terms of the food, if they see value in the drink, people will come.

Q. Starbucks is present in many airports across the country. How has that worked for the brand?

It has actually been the focus. In the last 8 weeks, we have entered 8 new stores in airports. Airports are an area that we are focussing on. As India expands and the economy grows, the airports are also upgrading. More consumers are now travelling by air or in general travelling. So that opens up another avenue for us in terms of where we can meet our consumers. But, having said that, it is not just about the airports, we are even present on the highways. The infrastructure has improved. So those are newer segments that give us an opportunity to connect with our consumers. So we will go there.