Swiss FMCG giant Nestle S.A. is planning to start selling Starbucks-branded coffee mixes and ready-to-drink products for at-home consumption in India. The plan was announced by Axel Touzet, head of Nestle's Coffee Strategic Business Unit, during his visit to the company’s coffee plant in Nanjangud near Mysore.
Nestle holds the global rights to market Starbucks consumer and foodservice products outside the company’s coffee shops under a 2018 agreement. The Swiss giant already sells Starbucks capsules for Nespresso and Nescafe Dolce Gusto coffee machines, as well as whole bean, roast and ground, and premium instant Starbucks coffees, including K-Cup pods.
Nestle later expanded its Starbucks on-the-go business globally and recently launched a range of ready-to-drink coffee beverages across Southeast Asia and Oceania. However, these products have not yet been launched in India.
"We continue to evaluate similar opportunities to expand our coffee portfolio in India to target different coffee consumption moments, as more and more people in India see coffee as their favourite beverage," Touzet told a group of reporters.
Banking on a Robust Beverage Business
In its third-quarter earnings, Nestle India reported that its beverages retail business crossed Rs 2,000 crore in the past 12 months, with coffee brand Nescafe strengthening its position.
The FMCG major's profit rose 4.9% year-on-year (YoY) to Rs 688 crore during the December quarter.
"Robust growth led by core brands Nescafe Classic, Nescafe Sunrise, Nescafe Gold, And Nescafe Roastery recorded strong growth and continued their premiumisation journey in metros and towns," the company stated in its earnings report.
Nestle India further said that Nescafe has introduced its coffee to over 30 million Indian households in the past seven years, driven by the emergence of speciality coffee chains that sell small-batch coffee sourced from local estates in Tamil Nadu and Karnataka.
According to Redseer Strategy Consultants, India's out-of-home coffee market is projected to grow at an impressive CAGR of 15-20% to become $2.6-$3.2 billion. The premium coffee segment (above Rs 200), which represented 46% of the market as of 2023, is expected to grow to 55-60% in the next three years. Starbucks operates over 450 stores in India through an equal joint venture with Tata Consumer Products Ltd.
