Taking the first step towards its long-awaited entry into India, US coffee chain Starbucks on Thursday said it has signed a pact with Tata group firm Tata Coffee for a possible alliance that could include retail operations and sourcing.
Starbucks Coffee Company and Tata Coffee signed a non-binding Memorandum of Understanding (MoU) to collaborate in sourcing of coffee beans and roasting facilities, relating to Starbucks entering retail operations in India initially.
Later on, the collaboration would also explore other Asian countries over a period of time, the two firms said in a joint statement.
"This MoU is the first step in our entry to India. We are focused on exploring local sourcing and roasting opportunities with thousands of coffee farmers within the Tata ecosystem," Starbucks Coffee Company Chairman, President and CEO Howard Schultz said.
He further added: "We believe India can be an important source for coffee in the domestic market, as well as globally where Starbucks has operations."
Starbucks is the world's biggest coffee chain, managing over 16,000 stores, and operates in more than 50 countries. It has been linked with several Indian firms such as Jubilant Foodworks, for partnership to start its retail operations.
Commenting on the development, Tata Coffee Chairman R K Krishnakumar said: "We welcome Starbucks entry into India because of both its unique experience with the store format and for its commitment to society values that we share."
Under the MoU, the two companies would look for sourcing and roasting high-quality green coffee beans in Tata Coffee's Coorg (India) facility.
The two companies will also collaborate on the promotion of responsible agronomy practices, including training for local farmers, technicians and agronomists, to improve their coffee-growing and milling skills, the statement added.
Tata Coffee, with its large arabica coffee production base spread over different growing districts of South India, has supplied premium coffee beans for Starbucks in the past, and is now building a structure for a long-term relationship.
In the areas of sourcing and roasting, Tata Coffee and Starbucks will explore procuring green coffee from Tata Coffee estates and roasting in Tata Coffee's existing roasting facilities.
At a later phase, both Tata Coffee and Starbucks will consider jointly investing in additional facilities and roasting green coffee for export to other markets.
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