The largest Coffee Retailer In The World Posted Its Slowest Growth

Starbucks, the world’s largest coffee retailer, posted its slowest sales growth in India last year, likely indicating that its novelty factor is waning as it focuses on profitability and halts aggressive expansion.

Tata Starbucks, the unit in India formed in partnership with the Tata Group, clocked net sales of Rs 272 crore, a growth of 14 per cent, during the year ended March 2017 and narrowed losses to Rs 32 crore, according to filings with the Registrar of Companies.

A year ago, it had posted sales of Rs 239 crore, a growth of 39 per cent, with a net loss of Rs 41 crore.

With 91 stores until March, a back-of-the-envelope calculation shows that each Starbucks shop sold coffee, snacks and merchandise worth Rs 3 crore.

That’s three times higher than bigger rival Coffee Day Enterprises, which runs the country’s top coffee house chain, Cafe Coffee Day, and had retail revenue of Rs 1,423 crore from 1,682 outlets, or about Rs 84 lakh annual sales per store.

West life Development, the operator of McDonald’s in west and south India, had revenue of Rs 3.6 crore per store on an average. According to experts, Starbucks’ performance in India has stabilised after initial years of high growth.

Ruchi Sally, director at retail consultancy Elargir Solutions said “India is a price-sensitive market, where brands have their own cycle of growth. With new region entry, global brands get high attention, which later stabilises. Starbucks’ premium pricing is also a challenge for opening stores at newer locations”.