Tata rejects report on Starbucks India exit as ‘baseless’

“This is with reference to the news article titled - ‘Starbucks to Exit India Due to High Costs, Bad Taste, and Mounting Losses’. The Company would like to state that the information in the said article is baseless,” the clarification letter read.

The article at the root of the rumour mill

The report in question suggested that the American coffee house could exit the Indian market citing “high operating costs and low profitability with a deviation from Indian consumer preferences”. It argued that even at premium prices, Starbucks has “failed to maintain the balance between its revenues and expenses.”

Starbucks postpones plan to open new stores

“We will calibrate for the short term – maybe instead of opening 100, we will open 80 now, and next year we will open 120 instead of 100,” he said.

Revenue slowdown

Tata Starbucks saw its revenue contract to 2% in the second quarter of the 2024 fiscal as compared to the 4% it reported in the previous quarter.

In the previous 2023-24 fiscal, the company had recorded a revenue growth of 12% at ₹1,218 crore, accounting for almost 8% of Tata Consumer Product’s consolidated revenue.

“My hypothesis is probably food inflation is higher than what we think it is, and the impact is far higher. And, therefore, there is a tightening of the belt. We also have to remember there is a shift in festival dates,” the CEO of the FMCG firm said.

Shares of Tata Consumer Product closed in the red at ₹907, down 0.26% on the NSE on December 19.