MILAN – The week began with an upward trend on both coffee futures markets, although this time it was more pronounced in New York. In yesterday’s session, Monday 16th December, the Ice Arabica contract for March delivery rose by 2.5% (+790 points) to close at 327.40 cents. The Ice Robusta coffee futures contract made more modest gains: the March contract closed at 5,203 dollars, up 19 cents on Friday.
The European Parliament is expected to vote today, Tuesday 17th December, to give final approval to the one-year delay in the implementation of the Eudr, the new Regulation on Deforestation-free products.
In other news, the economic crisis is also hitting Starbucks’ business in India, where the world’s largest coffee house chain is scaling back its expansion plans. In the face of lower customer traffic, Tata Starbucks Private Limited has revised its short-term targets, while maintaining its long-term goals from now until 2028.
The company expects double-digit growth in the second half of the fiscal year, but economic difficulties and rising costs will almost certainly lead to a squeeze on profits.
“We will calibrate for the short term – maybe instead of opening 100 (stores), we will open 80 now, and next year we will open 120 instead of 100,” Tata Consumer CEO Sunil D’Souza told Reuters, adding that Tata Starbucks is still focused on reaching its 2028 goal to operate 1,000 stores by 2028.
In India, one of the main obstacles to the expansion of the American chain is the lack of quality locations. “In India, good quality real estate with traffic… is a challenge,” D’Souza said, contrasting that to the “massive development of malls” in China.
However D’Souza is confident because he believes the culture and popularity of coffee will continue to grow in India, while the density of cafés is lower than in other Asian countries such as Indonesia, Vietnam and the Philippines.
In China, Starbucks’ second-largest market after North America, Starbucks is relying instead on a new corporate figure: Tony Yang, recently appointed Chief Growth Officer for the region. Yang, who joined Starbucks just over a month ago, previously worked for Jiyue Auto, a major Chinese car brand.
He has been tasked with improving the customer experience, developing new products and raising the profile of the Starbucks brand through partnerships with local entertainment celebrities. Starbucks is losing market share in China due to the economic crisis, which is driving consumers to cheaper alternatives.
In the last quarter, the American coffee chain reported a 14% fall in like-for-like sales in China.
New CEO Brian Niccol has announced a number of measures in recent months to streamline the management of its stores and to imrpove and speed up service. Niccol has also said that the company needs to better understand how to “unlock growth opportunities and leverage strengths” in China.
