The Story
Starbucks first tried to enter India back in 2007 but didn’t quite succeed. Fast forward to 2012, and the global coffee giant returned, this time teaming up with Tata Consumer Products to form a 50:50 joint venture—Tata Starbucks.
Their goal? To get Indians hooked on premium coffee. And for a few years, things went well. From FY17 to FY23, Starbucks enjoyed an impressive compound annual growth rate (CAGR) of over 20%. But by 2024, cracks started to show. Though the brand clocked ₹1,218 crore in sales, its losses surged to ₹82 crore, three times higher than the previous year. Sales growth also slipped to just 7% in the second half of FY24.
With over 450 stores across India, it’s clear something isn’t right. The question on everyone's mind is: Is Starbucks leaving India?
The Challenges
One of the biggest challenges Starbucks faces in India is price sensitivity. In a time when inflation is making everything more expensive—rent, groceries, you name it—a ₹300 cappuccino is increasingly seen as a luxury splurge, not an everyday indulgence.
But with rising disposable incomes, a younger demographic, and a growing appetite for luxury experiences, shouldn't Starbucks thrive?
Not exactly.
When Starbucks entered India, it aimed to introduce premium coffee culture to a largely tea-drinking nation. And it worked—especially with young people, who didn’t just come for the coffee but for the experience and the status symbol that the iconic green siren cup offered. Starbucks became a lifestyle brand.
But in the post-Covid world, consumer preferences have shifted. Many Indians are now exploring artisanal coffee blends, gourmet food, and looking for better value for money. Local coffee brands like Blue Tokai and Third Wave Coffee offer speciality brews for around ₹230, making Starbucks' ₹300 price tag less appealing. Even global rivals like Tim Hortons and Pret A Manger have entered the Indian market, intensifying the competition.
The Cultural Factor
India’s deep-rooted tea culture also plays a role in Starbucks’ struggle. Coffee is still viewed as a luxury, not a daily ritual, especially in smaller towns. Starbucks’ focus on large, premium stores in metros limits its reach to urban, affluent crowds.
Starbucks' challenges in India echo its experiences in Australia and Italy—two other markets where it faced resistance. In Australia, the local love for simple, high-quality espresso made Starbucks' sugary, flavoured coffees feel too foreign. The brand had to shut down over two-thirds of its stores. Similarly, in Italy, Starbucks couldn't break into the centuries-old espresso culture, and its commercialised vibe clashed with local traditions.
A New Approach
Despite the hurdles, Starbucks isn’t leaving India—at least not yet. In fact, the company has big plans. Its goal is to reach 1,000 stores by 2028, and it's looking beyond metros. Starbucks is opening drive-throughs and setting up outlets in tier-2 and tier-3 cities and airports.
The brand is also innovating to cater to Indian tastes. Take their new ‘experiential’ store in Delhi, offering both global and local flavours, or the launch of coffee with jaggery and milk—a nod to how many Indians drink their coffee at home. With prices starting at ₹150, Starbucks is making moves to resonate with local consumers.
The Road Ahead
While Starbucks isn’t giving up on India, it’s clear that localisation and affordability will be key to its future. Simply expanding won’t be enough. The company needs to adapt to India's price-sensitive market and offer more value to compete with local and international brands.
So, is Starbucks leaving India? No. But the brand is rethinking how to stay relevant in an increasingly competitive coffee landscape.