Tata Starbucks Posts 21 % Growth in 2019-20; Tata Consumer Products Ltd. Invests Rs 53 Cr in JV
Though business achieved "high store growth, Tata Starbucks' profitability was adversely impacted" in 2019-20 by reversal of deferred tax assets due to tax rate changes, implementation of the new accounting standards for leases and also to some extent by the impact of lockdown.
Tata Starbucks, the coffee chain joint venture (JV), posted a “growth of 21 per cent for the financial year 2019-20”, helped by an increase in sales and stores, according to the annual report of Tata Consumer Products Ltd (TCPL).
Though business achieved “high store growth, Tata Starbucks’ profitability was adversely impacted” in 2019-20 by reversal of deferred tax assets due to tax rate changes, implementation of the new accounting standards for leases and also to some extent by the impact of lockdown.
During the financial year 2020-21, TCPL invested Rs 53 crore in the JV, taking the total investment to Rs 288.80 crore.
Tata Starbucks, a 50:50 JV between Tata group firm TCPL and Starbucks Corporation, has added 39 new stores opened during the year, taking the total count to 185 stores in 11 cities.
“Our joint venture with Starbucks Corporation reflected a growth of 21 per cent for the year due to sales growth in stores coupled with store expansion,” said TCPL in its annual report for 2019-20.
However, TCPL did not provide revenue numbers for Tata Starbucks for the financial year 2019-20.
The business achieved high store growth across formats — airports, highways and smaller footprint stores, it added.
Though the company was “impacted a bit” in the fourth quarter of 2019-20 due to COVID-19 and subsequent disruptions in the market, as it had to shut all stores for over two weeks in March but now has opened some stores and expects the situation to normalise over the next few months.
“The business was impacted in the last quarter due to COVID-19, and a number of store openings that were scheduled in March 2020 had to be postponed. By the end of May 2020, we had around 60 stores opened for takeaway and deliveries in 10 out of the 11 cities we are present in,” it said.
Moreover, “some of our stores have now opened for delivery and takeaways and will progressively normalise”, it said.
In 2019-20, Tata Starbucks made a foray into new places such as Ahmedabad, Surat and Vadodara in Gujarat.
“During the financial year 2019-20, the company has invested an amount of Rs 53 crore towards equity capital in Tata Starbucks Private Limited,” it said.
In November 2019, Tata Starbucks had surpassed the milestone of 150 stores in India.
It has also witnessed a jump in the usage of the loyalty programme, which now forms 31 per cent of our revenues
“We also witnessed a very healthy jump in the usage of our loyalty programme, which now forms 31 per cent of our revenues, out of which 10 per cent is through mobile tender,” it said.
Besides, Tata Starbucks has achieved a 100 per cent pay parity among its employees.
“Further, we currently have 29 per cent of our workforce as women, and are aiming to push this number to 40 per cent by 2022,” it added.