January 14/Seattle/Diligent Media Corporation Ltd. -- Starbucks, which has over the last few months been rumored to be in talks with companies such as Jubilant Foodworks, Bharti and DLF for a retail franchise deal, finally announced one -- with Tata Coffee.

According to a joint press release, the non-binding memorandum of understanding (MoU) signed between the two companies will create avenues of collaboration for sourcing and roasting high-quality green coffee beans in Tata Coffee's Coorg facility.

Tata and Starbucks will also jointly explore the development of Starbucks retail stores in associated retail outlets and hotels.

R.K. Krishnakumar, chairman of Tata Coffee, has indicated that the first Starbucks store in India would come up in about six months, though the decision on the location will be taken by Starbucks.

Tata Coffee officials, however, remained unavailable for a comment. A query sent to Starbucks Corporation also remained unanswered.

"This MoU is the first step in our entry to India. We are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations," Howard Schultz, chairman, president and chief executive officer, Starbucks Coffee Co, said in the note.

The release also said that at a later phase, Tata Coffee and Starbucks will consider jointly investing in additional facilities and roasting green coffee for export to other markets.

The local coffee retail space has established players like the Barista Lavazza and Cafe Coffee Day and new players like Costa Coffee.

Starbucks has earlier made several attempts to enter India, but to no avail. In 2007, it had even evaluated entering the market with single-brand retail stores but failed to get a clearance from the Foreign Investment Promotion Board. It then started retailing a few of its products through multiplex company PVR in major cities.For Tata Coffee, on the other hand, it will be the second attempt at tapping the retail segment. It had earlier bought a significant stake in retail chain Barista Coffee from Turner Morrison, but finally divested it in favor of C Sivasankaran of Sterling group, who in turn sold it to Lavazza.  

From the January 17, 2011, Prepared Foods' Daily News
For more of the latest news from the food and beverage industry, visit Prepared Foods' Daily News