Tata Consumer Products has denied a media report that claimed American coffee chain, Starbucks, may be leaving India soon amid increasing losses and high operating costs. The company junked such reports as “baseless” in letters to three major Indian stock exchanges.
On December 19, The Philox, a media house based in Rajasthan, reported that Starbucks might be on its way out of India. The report headlined “Starbucks to Exit India Due to High Costs, Bad Taste, and Mounting Losses.”
The report indicated that the coffeehouse chain giant could be shutting shop in India as price-sensitive Indian consumers were preferring cheaper, locally available options. In 2012, the coffee chain giant entered India with Tata Consumer Products. The Philox report quoted no Tata official and acknowledged that “no official statement has been made”. Despite that it brazenly claimed Starbucks beverages are perceived as “overpriced and shallow” in India. “Despite its ambitious plans, Starbucks has failed to really make significant profits in the Indian market,” the report stated. It was issued days after Starbucks India confirmed that it would delay the intended launch of new store openings.
Tata Consumer issues a clarification
However, responding to the letter, Tata Consumer dubbed the media report as baseless. The letter said, “Explanation regarding news article with a heading: Starbucks to Get out of India as High Expenses, Bad Taste and Accumulative Losses Mount,” which indicated that Starbucks would definitely exit India. In fact, Tata Consumer Products mailed a letter to the National Stock Exchange of India, Bombay Stock Exchange, and Calcutta Stock Exchange stating that “the company wishes to state that the facts stated in the said article are without any basis”.
“Reports of Starbucks looking to exit India are completely false and baseless. Tata’s relationship with the coffee giant stands strong with shared values and commitment to India,” the company further told the media.
However, Tata Consumer CEO Sunil D’Souza told Reuters on Monday that the company will delay plans for some new store openings due to fewer customers visiting its cafes in India.
