Tata Consumer Products, facing reduced foot traffic in its Indian Starbucks cafes, will adjust short-term expansion plans while maintaining its 2028 goals. The company also anticipates double-digit revenue growth in the latter half of the fiscal year, but profits will likely be squeezed by rising raw material costs, including tea.
Starbucks China has appointed Tony Yang, former president of Tezign, as its first Chief Growth Officer. This follows a management shake-up in September with Molly Liu becoming sole CEO. The coffee giant faces stiff competition from local rivals like Luckin and Manner, leading to a 14% drop in comparable store sales in China during the last fiscal year.
Starbucks appointed Tressie Lieberman as executive vice president and global chief brand officer, a move by new CEO Brian Niccol to reinvigorate marketing and counter slumping sales. Lieberman, previously at Chipotle, where she worked with Niccol, will oversee marketing, product development, creative, and data analytics.
CEOs in retail and consumer goods sectors face shorter tenures as corporate boards act faster to replace them. Driven by increased investor activism and the need for rapid innovation, boards are making swift changes to signal improvement. The trend highlights a lack of patience at the board level, aiming for quick results.
In an interaction with ETRetail, Sushant Dash, CEO of Tata Starbucks, said, “We have nearly doubled our stores in the last three years, and we will continue to expand further." The growth will be driven by diverse store formats, including drive-throughs, metro outlets, and airport locations, catering to the evolving needs of consumers. “The fundamental idea will remain the same,” he added, emphasizing the brand's consistent focus on customer experience.
Verlinvest is set to invest Rs 200 crore in Blue Tokai Coffee Roasters at a Rs 1,200-crore valuation. Existing investors Hemendra Kothari’s family office and Anicut Capital are also expected to participate. This will be Blue Tokai's largest funding round as it competes with Starbucks, Tim Hortons, and other cafes in India's expanding coffee industry.
Starbucks' abrupt leadership change won't affect Tata Starbucks' Indian expansion plans, per Tata Consumer Products CEO Sunil D'Souza. The company aims to open 1,000 cafes by 2028. Despite new competition from Pret A Manger and Tim Hortons, Starbucks remains focused on growing its presence in the predominantly tea-drinking nation.
Niccol replaces Laxman Narasimhan, whose tenure only lasted a year-and-a-half after he was originally brought in as CEO in March 2023 to engineer a "reinvention" of the world's biggest coffee chain. Since then, the stock has continued to falter, losing nearly one-quarter of its value.
Michelle Gass, CEO of Levi Strauss & Co, emphasized the importance of leveraging India’s retail agility and speed as a model for global operations. In an interview, Gass praised the Indian team for their dynamic approach, contributing to a 54% increase in net sales in the country. Despite a slower retail growth rate across sectors in FY24, India remains crucial for Levi’s $10 billion revenue goal. Gass highlighted India’s youthful, fashion-forward consumer base and plans to incorporate successful strategies from the Indian market into Levi’s global operations.
Retailers, including luxury giant LVMH, L'Oreal, and Starbucks are all seeing lower sales in the world's second-largest economy, compared with past years. Chinese customers are choosing to save their money and spending on experiences when they do fork out. Starbucks, which reported earnings on Tuesday, saw an especially harsh reality check.
Major quick service restaurant chains including McDonald's, KFC, Pizza Hut, and Starbucks experienced a sharp decline in sales and revenue growth in the April-June quarter. This downturn was driven by inflation, increased competition, and an intense heatwave. Notably, McDonald's operator, Westlife Foodworld, and Tata-operated Starbucks reported significant downturns.
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