Starbucks, the world’s largest coffee
chain, and Nestlé, the world’s largest food company, on Monday said they were getting into a global deal to sell Starbucks coffee
products outside its cafes — in shops and supermarkets.
While the deal is likely to be concluded by the end of this year, analysts Business Standard
spoke to say the possibility of Starbucks-branded coffee
at Indian shops existed.
“I don’t rule that out,” Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss, said. “While timelines have not been indicated for an India launch, the deal actually paves the way for Starbucks-branded coffee
to be visible in Indian stores. Look at it this way: Starbucks
is popular in India and will love that extra distribution push that the deal will give it and Nestlé gets one more big brand in its portfolio,” he said.
Nestlé and Hindustan Unilever
(HUL) fight a pitched battle for leadership in the instant coffee
market in India, estimated at Rs 15 billion. Their brands include Nescafé and Bru, respectively. A third player, Tata Global Beverages (TGB), emerged when Tata Coffee
Grand was introduced in November 2015. While Nestlé will get another big product in its portfolio through the new deal, some experts said it could cannibalize sales of Nescafé. “That is something that Nestlé will have to account for, if it does indeed begin to sell Starbucks-branded coffee
in retail outlets here,” Arvind Singhal, chairman, Technopak, said. The bigger question is: Where does the new deal leave Starbucks’s joint venture with TGB in India? Six years ago, TGB and Starbucks
entered into a sourcing and retail arrangement in the country, which saw the two not only setting up Starbucks
stores in India, but the latter also getting roasted coffee
beans from TGB subsidiary Tata Coffee.
When announcing the launch of its first store in October 2012, former Tata Group chairman Ratan Tata and Starbucks
executive chairman Howard Schultz had said the arrangement could be expanded in the future to cover the latter’s consumer products division. In other words, TGB could distribute Starbucks-branded coffee
in retail shops and supermarkets here. That, however, will no longer happen, say experts, with Starbucks
and Nestlé getting into a new deal.
A mail sent to Tata Starbucks
India went unanswered till the time of going to press. Nestlé India did not indicate anything when contacted. Starbucks
has around 115 stores in India, covering cities such as Mumbai, Delhi, Bengaluru, Pune, Chennai, Hyderabad and Kolkata. The coffee
chain plans to enter more cities in the current financial year, launching over 24 stores during the period.