Starbucks to open in India

Starbucks will make its eagerly awaited foray into India later this year, opening outlets under a deal announced Monday with Tata Global Beverages to tap into the country's fast-growing taste for coffee.

Tata, part of steel-to-software conglomerate Tata Group, and Seattle-based Starbucks said they had entered into a 50:50 joint venture that will operate Starbucks cafes starting in New Delhi and Mumbai in August or September.

"India is a unique market which gives us huge opportunities," Starbucks' China and Asia Pacific president John Culver told reporters, saying they would not stop at India's two main cities.

Starbucks, the world's largest coffee shop chain, has plans for at least 50 outlets by the end of 2012 as the group bets on lifestyle changes that are turning the tea-drinking country into a booming market for cafes.

"We will move as fast as possible," Culver said.

Outlets are planned for shopping malls, airports, railway stations and other locations.

The joint venture will start up with an initial investment of four billion rupees ($78 million) and be branded "Starbucks Coffee: A Tata Alliance", said R.K. Krishnakumar, vice-chairman of Tata Global Beverages.

Starbucks has been eyeing the Indian market for years, but it will face strong competition from established coffee chains. The Indian-owned Cafe Coffee Day chain leads the pack with more than 1,000 outlets.

The nation of 1.2 billion people has traditionally been a tea-drinking country, but Western-style coffee chains have grown in popularity in recent years among the wealthy and growing middle class.

The change in tastes has less to do with a fondness for Italian espresso and more to do with the social cachet conferred by the beverage in class-conscious India, analysts say.

Starbucks initially planned to open up its first coffee shop in India in 2007 but put the plans on the backburner amid uncertainty about the government's foreign investment policy.

Starbucks has a separate deal to source coffee for its global operations, including its planned cafes in India, from Tata Global Beverages unit Tata Coffee, Asia's largest coffee plantation company.

Starbucks and Tata also said they were planning to jointly market a premium tea product to be called Tata Tazoi.