Starbucks bets on India's premium coffee boom amid rising competition

Hyderabad: Starbucks is doubling down on India's premium coffee opportunity, betting that a rapidly maturing café culture and rising consumer appetite for specialty coffee will continue to expand the overall market even as competition intensifies from homegrown and global chains.

The bet is also visible through the expansion of its premium Reserve format. Tata Starbucks has launched its first Reserve store in South India in Hyderabad, and sixth in the country. Speaking on the sidelines of the store launch, chief executive Sushant Dash said Starbucks has already seen evidence that Indian consumers are willing to pay for premium experiences. It is this evolving consumer that coffee chains in India are aggressively targeting.

Also Read: TATA Starbucks eyes expansion in metros, emerging high-growth cities; opens first Reserve store in South India


"I think competition has intensified, but competition is good and helps grow the category faster," Dash said. "From a penetration which was 11%, it is now up to 20-25%, and it is growing at around 20% , so we will see the coffee category expand. For us, it is not about gaining share from another brand, it is about growing the category."

India's premium café market has become significantly more crowded over the past few years, with specialty coffee chains such as Blue Tokai, Third Wave Coffee, Subko and Nothing Before Coffee expanding aggressively, alongside international brands including Tim Hortons and Pret A Manger. The competition comes as consumers increasingly experiment with single-origin coffees, manual brewing methods and experience-led cafés.

The comments come as Tata Starbucks starting to see signs of growth after a challenging period last year. The joint venture between Tata Consumer Products and Starbucks reported a 7% rise in revenue to Rs 1,367 crore in FY26, narrowed its net loss to Rs 98.95 crore while revenue rose 11% YoY and same-store sales grew in the mid-single digits in the June quarter.

Also Read: Blue Tokai brews up competition with Starbucks in India’s potential $1.15 billion market: Report

At the Tata Consumer Products' AGM in June, Chairman N. Chandrasekaran described Tata Starbucks as a very high-potential business, saying the partners believe India could eventually support 8,000 Starbucks stores over the long term, and that the JV has turned operating (EBITDA) profitable.

Dash says the focus is now on consistently improving profitability through better execution and operational optimisation, while continuing to invest in expansion with plans to add 50-100 stores every year over the next 2-3 years.

"Our stores have been profitable and cash-positive for the last two to three years. We continue to grow... last year we delivered double-digit growth, and in the last quarter revenue grew around 11-11.5%. Tata Consumer also reported that we turned EBITDA positive last year, so all the financial indicators are moving in the right direction," Dash said

The company has also stepped up menu innovation over the past year, introducing protein beverages, matcha drinks, zero-sugar options and lower-calorie food as it adapts to changing consumer preferences. Dash said Starbucks will continue evaluating emerging wellness trends, though any new launches must fit the brand and be commercially viable.