R K Krishna Kumar, chairman, Tata Coffee, and Director, Tata Sons, is the brain behind the beverage, retail and hospitality play of the entire group. The Starbucks alliance will be yet another feather in his cap. In an interview with Arijit Barman, he says there will be no conflict with the existing joint venture with Pepsi. Edited excerpts:
Why house this alliance in Tata Coffee and not Tata Global Beverages?
Tata Global Beverages has a specific mandate to grow and develop its own brands. The current alliance with Starbucks will be predominantly a plantation operation.
But why didn’t you get into an exclusive arrangement with Starbucks on front-end retail?
There is no exclusivity as of now; all that will evolve with the partnership. We don’t want to be just a franchise partner, although globally that’s the model Starbucks follows. The Tata brand is a hallowed one. So, the branding-related discussions will happen parallelly. It’s up to Starbucks to decide what kind of a sustainable partner they are looking at, what will be the shared values, etc.
What about exploiting the existing Tata retail and hotel eco system?
It won’t be fair for me to talk about specifics, as that needs to be worked out by individual group companies. All I can say now is that Starbucks in the US has a store within store model, so that’s an area where we may possibly explore joint opportunities. Like Starbucks kiosks, for example. The front-end stores will have the Starbucks name.
Some idea about the rollout plans?
I guess within the next six to seven months, we can expect to have the first store.
Is there a possibility of any equity contribution, going forward?
As of now, there is no equity involved but it could be a possibility in future.
Starbucks is also keen on beverages beyond coffee; so are you. Will you restrict the scope of this alliance to just coffee?
As of now, we are only looking at supplying coffee, but things may pan out in future.
You have a 50:50 joint venture with Pepsi. If you are open to expanding the ambit of association with Starbucks, do you see a potential conflict of interest?
The fundamental difference between the two will be this. The Pepsi JV will look at beverages in a bottle that can be sold through different retail formats. With Starbucks, we would look at beverages that can be sold within a store. Also, Pepsi and Starbucks themselves have a 50:50 JV in the US for beverages sold outside the Starbucks stores. The first meeting between Pepsi and us is scheduled for the month-end.
In terms of supply arrangement, will it be global sourcing for Starbucks?
Considering the freight costs involved, I suspect it would be restricted to India, South Asia and, maybe, some parts of China.
Do you regret exiting Barista? You could have had an early mover advantage.
No. That decision was taken in the background of the prevailing circumstances. The top management thought at the time that continuing with Barista did not make sense. The café phenomenon is a relatively new concept.