F&B chains drool at the Indian market
February 8, 2012

Buoyed by Chinese consumers avarice for all foods and beverages yummy,Yum brands, costa coffee and Starbucks are all oogling at the India market.

US listed Yum brands recently announced that it is looking at expanding its India operations. The company who brought KFC, Pizza Hut and Taco Bell to the world is looking at adding 600 restaurants in China and another 100 in India, on course with its massive international expansion drive. Meanwhile Yum has appointed Pricewaterhourse Coopers to sell its entire Pizza Hut Uk business to a master franchise to streamline costs and operations in an already sinking economy.

India is Yum’s second-leading country for new restaurants. The company added 101 new stores in India in 2011 as it tries to replicate its formula for success in China. In a sign of India’s expanding role, Yum will start reporting India’s results as a separate business segment.

“While we don’t expect meaningful profit contributions from India this year, we are laying the foundation for this business to have a significant impact on Yum’s profit growth in the future,” Yum Chairman and CEO David C. Novak said.

Similarly competing coffee chains Costa Coffee and Starbucks both of which have created a sensation in China, are eager to create a storm in India’s tea cup. While Starbucks is all set to enter India through the Tata group, Costa which already has a presence in the mostly tea swiveling nation plans to expand operations from 95 to 155 outlets this year. Starbucks’s joint venture with Indian conglomerate Tata Group will set up 50 co-branded cafés in Indian cities over the next eight months.

Despite the economic slowdown the café chain major is upbeat about its growth in India. Presence of a high youth population with a propensity to spending and seeking convenience, provides scope for growth. The café chain sector with Café Coffee Day, Lavazza, Java City, Barista along with Costa Coffee are driving a growth rate of 30 per cent annually with a market size of Rs 1, 600 crore.

“India is not a mature market for café chains but there are promising prospects for growth. Café chains are viewed by the target consumers more for social occasions,” stated the Costa Coffee India chief.

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