India's Tata Coffee Ltd said on Monday it signed an agreement last week with Seattle-based Starbucks Corp, the world's largest coffee chain, to sell premium arabica grade coffee beans.
The announcement by Asia's largest coffee conglomerate, whose interest's range from plantations to cafes, marks India's entry as a source of raw coffee to Starbucks, which pays a premium to sellers for environment and labour-friendly policies.
"Starbucks would buy coffee beans at a 40 percent price premium (over global market prices) from Tata Coffee," the Indian Company said in a statement.
Starbucks has also signed up privately held Rematch Exports Pvt Ltd for supply of beans from India, which produces 4 percent of the world's coffee and is raising its profile in a market for premium and specialty grades. Tata Coffee officials did not give any details of quantities at a news conference. "This is an initial order. I think the potential is tremendous," said Hammed Ashram, Tata Coffee's managing director. He said Tata Coffee had met several conditions on soil, water, pest control, and environment and workers' welfare, for which Starbucks awards points while choosing suppliers. "The premium is a function of both quality and social responsibility," said Hammed Huq, the company's vice-president, plantations. Tata Coffee, which has a 34 percent stake in India's Barrister chain of snack-and-coffee sellers, is part of India's salt-to-software Tata industrial empire.
It produces 10 million kg from 7,000 hectares of plantations, and competes with Nestle Ltd and Hindustan Lever Ltd in India's branded coffee market.
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