LITTLE red flags jut out from the shelves at a CVS drugstore in suburban Boston, alerting shoppers to shortages of nearly a dozen Johnson & Johnson products. Among them are Motrin, Rolaids, children’s Tylenol liquid and adult Tylenol, Mylanta, Pepcid AC and even some Neutrogena skin care products.
“Looking for Tylenol pain relief products?” asks one of the signs. The notices at CVS serve as a stark reproof to Johnson & Johnson, whose brands have for more than a century been synonymous with quality. Some of its products are in short supply at drugstores and supermarkets because the McNeil Consumer Healthcare unit of J.& J. last year recalled about 288 million items, including about 136 million bottles of liquid Tylenol, Motrin, Zyrtec and Benadryl for infants and children.
Johnson & Johnson has had to recall such a variety of products because of quality-control problems across product lines, in multiple factories and in several units last year. Some of its consumer products, for instance, may have contained bits of metal. Others came in bottles with a moldy smell. And some products have gone missing from stores with hardly an explanation. All of this has put the company and its manufacturing under the intense scrutiny of lawmakers and officials at the Food and Drug Administration.
“It looks like a plane spinning out of control,” says David Vinjamuri, a former J.& J. marketing employee who now trains brand managers at his company, ThirdWay Brand Trainers.
While the drugstore signs that helpfully suggest “Try CVS/pharmacy brand” are intended to assist frustrated shoppers in identifying alternatives to missing brand-name products, they also serve as constant reminders of another of J.& J.’s continuing problems: It must persuade millions of disappointed customers to once again pay a premium for products that may no longer seem to be of any higher quality than the less expensive store brand.
“I don’t even consider buying them any more,” says Thien-Kim Lam, a mother of two and a blogger in Silver Spring, Md. In a post last spring titled “Makers of Tylenol, I’m Disappointed in You” on the blog DC Metro Moms, Ms. Lam wrote about the huge recall of J.& J. infants’ and children’s medicines.
Now, she says, the frequent recalls have prompted her to switch to generic cold and cough medicines for her children. “It’s like a breakup,” she says. “I’m done. I’ve moved on.”
Bonnie Jacobs, a McNeil spokeswoman, says the company is committed to restoring McNeil’s reputation as a world-class manufacturer of over-the-counter medicines. “We will invest the necessary resources and make whatever changes are needed to do so, and we will take the time to do it right,” she wrote in an e-mail last Thursday.
If Queen Elizabeth II had been the chief executive of Johnson & Johnson, she might have called 2010 an “annus horribilis.”
J.& J.’s troubles with some of its consumer products began in earnest last January, when McNeil recalled millions of pill bottles after some consumers complained that they smelled like mold. By December, when it recalled 13 million packages of Rolaids soft chews that may have been contaminated with metal or wood particles, the company had closed one plant in Fort Washington, Pa., for an overhaul and had yet to solve the quality problems at another, in Puerto Rico.
The response of J.& J.’s chief executive, William C. Weldon, has been to allocate more than $100 million to upgrade McNeil’s plants and equipment, appoint new manufacturing executives, hire a third-party consulting firm to improve procedures and systems at McNeil and shore up quality control companywide. In Congressional testimony last fall, he promised that when the Pennsylvania plant reopened, it would “represent the state of the art in medicine production.” And he has repeatedly tried to reassure consumers, as he did when he promised that J.& J. had “no higher concern than providing parents with the highest-quality products for their children.”
Those reassurances, however, have been followed by yet more recalls. What is most perplexing is the seeming inability of executives to solve — and satisfactorily explain — the manufacturing issues that dog the company. Federal regulators have continued to fault the McNeil unit for failing to identify and address systemic problems at its plants, and consumers remain mystified about why simple products like O.B. tampons can disappear from drugstore shelves.
In July, McNeil submitted a plan to the F.D.A. detailing how it intends to overhaul its operations. To comply with regulatory standards, McNeil is undertaking thorough manufacturing and quality-control reviews for all its products, Ms. Jacobs says.
That means the recalls may continue. Last Thursday, Ms. Jacobs said the company would “take whatever steps are needed to ensure our products meet quality standards, including further recalls if warranted.”
Only a day later, McNeil recalled 47 million units of Sudafed, Sinutab, Benadryl and other drugs from wholesalers because of issues like inadequate equipment cleaning practices. The company said that the recalls were not a result of health problems and that consumers could continue to use the products.
JOHNSON & JOHNSON, with about $62 billion in sales in 2009, makes thousands of different kinds of products, including Band-Aids, baby shampoo, cardiac stents and advanced drug treatments for rheumatoid arthritis. It solidified a reputation for product quality with a company credo, dating from 1943, saying that the company owed its first responsibility to the mothers and fathers, doctors, nurses and patients who use its products.
With such a diversity of products and operating companies, Johnson & Johnson’s overall business has not suffered significantly. But the string of recent recalls at McNeil threatens to weaken the kind of trust that made many people willing to pay more for J.& J. brands.
Saturday, January 15, 2011
Emami Paper to Borrow, Sell Shares to Raise $443 Million to Add Capacity
Emami Paper Mills Ltd., an Indian supplier to the world’s largest selling English newspaper, plans to raise 20 billion rupees ($443 million) from borrowings and a share sale in the next four years to add capacity.
The Kolkata-based company may raise 6 billion rupees through internal accrual and the sale of shares, and the balance 14 billion rupees through debt, Chief Executive Officer P.S. Patwari said in an interview at his office. Emami Paper plans to raise capacity of its newsprint manufacturing units and set up a new facility to make wood-based writing and printing paper.
Economic acceleration is increasing literacy in India, the world’s most populated nation after China, and boosting newspaper readership luring investors including Blackstone Group LP into the industry. Demand for paper is expected to grow 57 percent to 14 million tons in the seven years to 2015, according to the Indian Paper Manufacturers Association.
“Now that newspaper companies are expanding, it is a favorable time for us to look at expansion and also increase newsprint prices,” Patwari said. The company plans to raise prices of newsprint by 14 percent to as much as $800 a ton in April, he said.
Emami Paper’s shares, which have declined 15 percent this month, gained 3.7 percent to 52.3 at 9:46 a.m. in Mumbai after surging as much as 13 percent.
Blackstone Group, the world’s largest private equity firm, in April said it plans to invest 2.25 billion rupees in Jagran Media Network Pvt. A unit of Jagran Media prints Dainik Jagran, which claims to be the world’s most widely read newspaper with a readership of 54.6 million.
Emami Paper supplies newsprint to the Times of India, the world’s largest selling English-language broadsheet.
The paper maker will spend 6 billion rupees to raise the production capacity of its two existing newsprint units to 250,000 tons a year from 150,000 tons, Patwari said.
India’s $1.3 trillion economy may expand 8.5 percent in the year ending March 31, according to the Indian central bank.
The Kolkata-based company may raise 6 billion rupees through internal accrual and the sale of shares, and the balance 14 billion rupees through debt, Chief Executive Officer P.S. Patwari said in an interview at his office. Emami Paper plans to raise capacity of its newsprint manufacturing units and set up a new facility to make wood-based writing and printing paper.
Economic acceleration is increasing literacy in India, the world’s most populated nation after China, and boosting newspaper readership luring investors including Blackstone Group LP into the industry. Demand for paper is expected to grow 57 percent to 14 million tons in the seven years to 2015, according to the Indian Paper Manufacturers Association.
“Now that newspaper companies are expanding, it is a favorable time for us to look at expansion and also increase newsprint prices,” Patwari said. The company plans to raise prices of newsprint by 14 percent to as much as $800 a ton in April, he said.
Emami Paper’s shares, which have declined 15 percent this month, gained 3.7 percent to 52.3 at 9:46 a.m. in Mumbai after surging as much as 13 percent.
Blackstone Group, the world’s largest private equity firm, in April said it plans to invest 2.25 billion rupees in Jagran Media Network Pvt. A unit of Jagran Media prints Dainik Jagran, which claims to be the world’s most widely read newspaper with a readership of 54.6 million.
Emami Paper supplies newsprint to the Times of India, the world’s largest selling English-language broadsheet.
The paper maker will spend 6 billion rupees to raise the production capacity of its two existing newsprint units to 250,000 tons a year from 150,000 tons, Patwari said.
India’s $1.3 trillion economy may expand 8.5 percent in the year ending March 31, according to the Indian central bank.
Sensex Plunges 10% From Peak on Concern Inflation May Prompt Higher Rates
India’s stocks fell, dragging the benchmark index 10 percent below its November record, amid concern rising prices will erode profit growth and prompt the central bank to raise interest rates.
Tata Motors Ltd., the nation’s biggest truckmaker, dropped for the first time in three days. Inflation and rising commodity prices are major challenges, Finance Minister Pranab Mukherjee said today after a government report showed the pace of price increases accelerated last month. Steel Authority of India Ltd., the country’s second-largest producer, sank to its lowest level in more than 14 months after saying higher costs contributed to a 34 percent slide in quarterly net income.
“Inflation is a big concern,” said Rajat Jain, Chief Investment Officer at Principal Pnb Asset Management Co. in Mumbai, who oversees the equivalent of $1.3 billion in assets. “There could be some earnings downgrades by analysts.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 322.38, or 1.7 percent, to 18,860.44 at the 3:30 p.m. in Mumbai, completing a 10 percent slide from a record close on Nov. 5. The gauge fell 4.2 percent this week, the most since May, and its 8 percent drop this year makes it the worst performer in dollar terms among the world’s 10 largest equity markets.
The S&P CNX Nifty Index on the National Stock Exchange dropped 1.7 percent to 5,654.55. The BSE 200 Index retreated 1.7 percent to 2,339.28.
Tata Motors
Tata Motors fell 4.4 percent to 1,182.4 rupees. Maruti Suzuki India Ltd., the biggest carmaker, sank 3.5 percent to 1269.7 rupees.
The benchmark wholesale-price index rose 8.43 percent in December from a year earlier after a 7.48 percent gain in November, according to a commerce ministry statement in New Delhi today.
“Investors are worried that the central bank will take strict measures as inflation continues to be out of control,” said Ranjit Kapadia, vice-president for institutional research at HDFC Securities Ltd. in Mumbai.
State Bank of India, the nation’s biggest lender, lost 2.3 percent to 2,500.8 rupees. HDFC Bank Ltd., the third-biggest, decreased 4.4 percent to 2,049.55 rupees.
The yield on the benchmark nine-year government bond has gained 28 basis points to 8.19 percent this month on speculation Reserve Bank of India Governor Duvvuri Subbarao may boost interest rates for the seventh time in a year at the next scheduled monetary policy meeting on Jan. 25.
Selling India
Global funds are poised to sell more Indian stocks than they bought this month, the first monthly foreign outflows since May. They disposed of a net 982 million rupees of the equities on Jan. 12, the sixth straight day of withdrawals, according to data on the website of the Securities and Exchange Board of India. That’s the longest string of sales since May.
Steel Authority of India, plunged 6.3 percent to 161.4 rupees, its lowest close since Nov. 4, 2009. Third-quarter profit was 11 billion rupees ($245 million), lower than the 14.1 billion-rupee average of 19 analyst estimates compiled by Bloomberg. Raw material costs rose 38 percent, while total expenses increased 30 percent, it said in a statement.
Jubilant FoodWorks Ltd., the local franchisee of Domino’s Pizza Inc., declined 5.7 percent to 562.2 rupees.
“There are inflationary pressures on labor, food items and fuel, which are putting strain on the business,” Chief Executive Officer Ajay Kaul said in an interview.
India will import onions, a key ingredient in local cuisine, and keep a ban on exports of edible oils and lentils to cool higher costs for food items, Prime Minister Manmohan Singh said yesterday.
The Reserve Bank of India, which raised rates the most in Asia in 2010, held off on boosting borrowing costs in the last policy statement on Dec. 16 as a record 1.1 trillion rupees of share sales by companies including Coal India Ltd. caused a cash squeeze at lenders.
Tata Motors Ltd., the nation’s biggest truckmaker, dropped for the first time in three days. Inflation and rising commodity prices are major challenges, Finance Minister Pranab Mukherjee said today after a government report showed the pace of price increases accelerated last month. Steel Authority of India Ltd., the country’s second-largest producer, sank to its lowest level in more than 14 months after saying higher costs contributed to a 34 percent slide in quarterly net income.
“Inflation is a big concern,” said Rajat Jain, Chief Investment Officer at Principal Pnb Asset Management Co. in Mumbai, who oversees the equivalent of $1.3 billion in assets. “There could be some earnings downgrades by analysts.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 322.38, or 1.7 percent, to 18,860.44 at the 3:30 p.m. in Mumbai, completing a 10 percent slide from a record close on Nov. 5. The gauge fell 4.2 percent this week, the most since May, and its 8 percent drop this year makes it the worst performer in dollar terms among the world’s 10 largest equity markets.
The S&P CNX Nifty Index on the National Stock Exchange dropped 1.7 percent to 5,654.55. The BSE 200 Index retreated 1.7 percent to 2,339.28.
Tata Motors
Tata Motors fell 4.4 percent to 1,182.4 rupees. Maruti Suzuki India Ltd., the biggest carmaker, sank 3.5 percent to 1269.7 rupees.
The benchmark wholesale-price index rose 8.43 percent in December from a year earlier after a 7.48 percent gain in November, according to a commerce ministry statement in New Delhi today.
“Investors are worried that the central bank will take strict measures as inflation continues to be out of control,” said Ranjit Kapadia, vice-president for institutional research at HDFC Securities Ltd. in Mumbai.
State Bank of India, the nation’s biggest lender, lost 2.3 percent to 2,500.8 rupees. HDFC Bank Ltd., the third-biggest, decreased 4.4 percent to 2,049.55 rupees.
The yield on the benchmark nine-year government bond has gained 28 basis points to 8.19 percent this month on speculation Reserve Bank of India Governor Duvvuri Subbarao may boost interest rates for the seventh time in a year at the next scheduled monetary policy meeting on Jan. 25.
Selling India
Global funds are poised to sell more Indian stocks than they bought this month, the first monthly foreign outflows since May. They disposed of a net 982 million rupees of the equities on Jan. 12, the sixth straight day of withdrawals, according to data on the website of the Securities and Exchange Board of India. That’s the longest string of sales since May.
Steel Authority of India, plunged 6.3 percent to 161.4 rupees, its lowest close since Nov. 4, 2009. Third-quarter profit was 11 billion rupees ($245 million), lower than the 14.1 billion-rupee average of 19 analyst estimates compiled by Bloomberg. Raw material costs rose 38 percent, while total expenses increased 30 percent, it said in a statement.
Jubilant FoodWorks Ltd., the local franchisee of Domino’s Pizza Inc., declined 5.7 percent to 562.2 rupees.
“There are inflationary pressures on labor, food items and fuel, which are putting strain on the business,” Chief Executive Officer Ajay Kaul said in an interview.
India will import onions, a key ingredient in local cuisine, and keep a ban on exports of edible oils and lentils to cool higher costs for food items, Prime Minister Manmohan Singh said yesterday.
The Reserve Bank of India, which raised rates the most in Asia in 2010, held off on boosting borrowing costs in the last policy statement on Dec. 16 as a record 1.1 trillion rupees of share sales by companies including Coal India Ltd. caused a cash squeeze at lenders.
At least 100 pilgrims killed in India stampede
THIRUVANANTHAPURAM, India, Jan 15 (Reuters) - A stampede sparked by a night-time road accident in dense forest has killed more than 100 Hindu pilgrims in the southern Indian state of Kerala, police and officials said on Saturday.
The state’s deputy general of police told reporters that 102 people had been killed on Friday night. Officials at a Hindu temple estimated the death toll at around 100, Kerala Temple Affairs Minister Ramachandran Kadannappally said by telephone.
Kerala’s chief minister has called for an emergency meeting of the state government, as Indian Prime Minister Manmohan Singh pledged up to 100,000 rupees ($2,200) compensation to each of the families of those killed, the Press Trust of India reported.
“It is an unfortunate incident. The Prime Minister has called us and assured that all measures will be taken. My government will decide on a suitable compensation amount,” V.S Achuthanandan, Kerala Chief Minister, told CNN-IBN.
Hundreds of thousands had gathered at the hilltop shrine of Sabarimala on Friday evening, the last day of an annual two-month religious festival.
A bus carrying pilgrims back to the neighbouring state of Karnataka collided with a jeep and went out of control, crushing people walking nearby, Kadannappally said. Panicked pilgrims rushed forward, triggering a stampede.
“The rescue operations are extremely difficult as the incident occurred in a dense forest where the roads are very narrow,” he said.
“They came down the hillside... this happened primarly because the area was totally dark,” Jacob Punnoose, Kerala Deputy General of Police told Times Now TV channel.
Stampedes at large public gatherings are common in India, especially at popular places of worship. Large numbers throng congested areas with few or no safety regulations and inadequate crowd management measures.
Fifty-two pilgrims were killed in an almost identical stampede at Sabarimala in 1999. An investigation into the deaths found the state government guilty of negligence in ensuring public safety.
The state’s deputy general of police told reporters that 102 people had been killed on Friday night. Officials at a Hindu temple estimated the death toll at around 100, Kerala Temple Affairs Minister Ramachandran Kadannappally said by telephone.
Kerala’s chief minister has called for an emergency meeting of the state government, as Indian Prime Minister Manmohan Singh pledged up to 100,000 rupees ($2,200) compensation to each of the families of those killed, the Press Trust of India reported.
“It is an unfortunate incident. The Prime Minister has called us and assured that all measures will be taken. My government will decide on a suitable compensation amount,” V.S Achuthanandan, Kerala Chief Minister, told CNN-IBN.
Hundreds of thousands had gathered at the hilltop shrine of Sabarimala on Friday evening, the last day of an annual two-month religious festival.
A bus carrying pilgrims back to the neighbouring state of Karnataka collided with a jeep and went out of control, crushing people walking nearby, Kadannappally said. Panicked pilgrims rushed forward, triggering a stampede.
“The rescue operations are extremely difficult as the incident occurred in a dense forest where the roads are very narrow,” he said.
“They came down the hillside... this happened primarly because the area was totally dark,” Jacob Punnoose, Kerala Deputy General of Police told Times Now TV channel.
Stampedes at large public gatherings are common in India, especially at popular places of worship. Large numbers throng congested areas with few or no safety regulations and inadequate crowd management measures.
Fifty-two pilgrims were killed in an almost identical stampede at Sabarimala in 1999. An investigation into the deaths found the state government guilty of negligence in ensuring public safety.
Thursday, January 13, 2011
S.E.C. Looking Into Deals With Sovereign Funds
The Securities and Exchange Commission has begun examining whether American financial firms may have violated bribery laws in their dealings with sovereign wealth funds, people briefed on the matter said on Thursday.
The S.E.C. is looking into whether these companies, including banks and private equity firms, violated the Foreign Corrupt Practices Act in their efforts to secure investments from foreign governments’ investment funds.
The agency sent letters to several firms recently asking them to preserve documents, though it is only in the early stages of its inquiry, these people said, speaking on condition of anonymity because the investigation was confidential.
A spokesman for the S.E.C. declined to comment.
At the heart of the inquiry are the huge investments made by sovereign wealth funds in American financial firms in recent years, many struck just as a financial crisis began to snowball. Citigroup, Morgan Stanley and Merrill Lynch all sought capital injections from these government investment funds, raising billions of dollars in capital to shore up their balance sheets.
Private equity firms have been courting sovereign wealth funds as partners, not just as investors in their funds. The China Investment Corporation bought a big stake in the Blackstone Group before that firm’s initial public offering in 2007, while the Carlyle Group and Apollo Global Management sold stakes to funds run by Abu Dhabi.
Violations of the antibribery act usually involve improper payments made by companies to win business from foreign government officials, and can involve benefits like entertainment or trips.
In recent years, the Justice Department has stepped up criminal investigations into possible violations of the act. In February last year, BAE Systems of Britain, Europe’s largest military contractor agreed to pay a $400 million fine to settle an investigation into questionable payments to win contracts in a number of countries.
The S.E.C. is looking into whether these companies, including banks and private equity firms, violated the Foreign Corrupt Practices Act in their efforts to secure investments from foreign governments’ investment funds.
The agency sent letters to several firms recently asking them to preserve documents, though it is only in the early stages of its inquiry, these people said, speaking on condition of anonymity because the investigation was confidential.
A spokesman for the S.E.C. declined to comment.
At the heart of the inquiry are the huge investments made by sovereign wealth funds in American financial firms in recent years, many struck just as a financial crisis began to snowball. Citigroup, Morgan Stanley and Merrill Lynch all sought capital injections from these government investment funds, raising billions of dollars in capital to shore up their balance sheets.
Private equity firms have been courting sovereign wealth funds as partners, not just as investors in their funds. The China Investment Corporation bought a big stake in the Blackstone Group before that firm’s initial public offering in 2007, while the Carlyle Group and Apollo Global Management sold stakes to funds run by Abu Dhabi.
Violations of the antibribery act usually involve improper payments made by companies to win business from foreign government officials, and can involve benefits like entertainment or trips.
In recent years, the Justice Department has stepped up criminal investigations into possible violations of the act. In February last year, BAE Systems of Britain, Europe’s largest military contractor agreed to pay a $400 million fine to settle an investigation into questionable payments to win contracts in a number of countries.
New Delhi to act on soaring prices of food
India will review imports and exports of all essential commodities in an attempt to tackle soaring food prices, the government has said.
New Delhi has struggled to deal with spiralling food inflation that has hurt the millions of Indians who spend 50 per cent of their income on food.
EDITOR’S CHOICE
Little relief seen in Indian food prices - Jan-13
Delhi onion sellers strike against raids - Jan-12
Economic fears as Indian food prices soar - Jan-06
UN body warns of ‘food price shock’ - Jan-05
Opinion: Time for India to rein in its robber barons - Jan-06
Algerians riot over rising price of food - Jan-06
The government said on Thursday it would “impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies”. The announcement was made as countries from China to Algeria struggle to cope with rising food prices. Food inflation in India eased slightly to 16.9 per cent for the week to January 1, after hitting 18.3 per cent the previous week, the commerce and industry ministry said on Thursday.
But the cost of onions and other vegetables, the main drivers of food price rises, has continued to increase after unusual weather destroyed crops.
It is unclear what specific action the government will take. Industry observers suggest the plan is for state-run enterprises to control prices by absorbing losses and providing food staples at lower prices.
Madan Diwan, an analyst at Ramchandra Bhimaaji in Pune, said this was “a first signal to the market that the government is taking control of important commodities”.
New Delhi said it would take “stringent action against hoarders and black marketeers manipulating prices, to ensure that products reach markets properly and prices remain moderate”. It would also increase storage facilities and modernise warehouses.
A. Prasanna, chief economist at ICICI Securities, said: “This measure won’t solve the problem . . . the damage has already been done by the bad crop.”
Analysts say that structural factors such as low farm productivity and poor food storage and distribution networks are the underlying reasons for high food inflation.
New Delhi has struggled to deal with spiralling food inflation that has hurt the millions of Indians who spend 50 per cent of their income on food.
EDITOR’S CHOICE
Little relief seen in Indian food prices - Jan-13
Delhi onion sellers strike against raids - Jan-12
Economic fears as Indian food prices soar - Jan-06
UN body warns of ‘food price shock’ - Jan-05
Opinion: Time for India to rein in its robber barons - Jan-06
Algerians riot over rising price of food - Jan-06
The government said on Thursday it would “impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies”. The announcement was made as countries from China to Algeria struggle to cope with rising food prices. Food inflation in India eased slightly to 16.9 per cent for the week to January 1, after hitting 18.3 per cent the previous week, the commerce and industry ministry said on Thursday.
But the cost of onions and other vegetables, the main drivers of food price rises, has continued to increase after unusual weather destroyed crops.
It is unclear what specific action the government will take. Industry observers suggest the plan is for state-run enterprises to control prices by absorbing losses and providing food staples at lower prices.
Madan Diwan, an analyst at Ramchandra Bhimaaji in Pune, said this was “a first signal to the market that the government is taking control of important commodities”.
New Delhi said it would take “stringent action against hoarders and black marketeers manipulating prices, to ensure that products reach markets properly and prices remain moderate”. It would also increase storage facilities and modernise warehouses.
A. Prasanna, chief economist at ICICI Securities, said: “This measure won’t solve the problem . . . the damage has already been done by the bad crop.”
Analysts say that structural factors such as low farm productivity and poor food storage and distribution networks are the underlying reasons for high food inflation.
Starbucks in Accord With Tata Coffee as U.S. Chain Weighs Entry Into India
Starbucks Corp., the world’s largest coffee-shop operator, signed an accord with India’s Tata Coffee Ltd. to source coffee beans and to explore opening stores in the country, as the retailer ramps up expansion outside the U.S.
Starbucks and Bangalore-based Tata, Asia’s largest publicly traded coffee grower, announced the non-binding agreement in a statement today. Tata, majority-owned by Tata Global Beverages Ltd., a unit of India’s second-biggest industrial group, has supplied coffee beans to Seattle-based Starbucks, the companies said.
Starbucks Chief Executive Officer Howard Schultz plans to open 400 outlets, of 500 new stores, outside the U.S. in the fiscal year that began in October. Starbucks operates more than 16,800 stores in more than 50 countries, with about one-fifth of its sales coming from non-U.S. locations.
The agreement “is the first step in our entry to India,” Schultz said in the statement. “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.”
The first Starbucks store in India will open in six to seven months, Tata Coffee Chairman R.K. Krishna Kumar said today in an interview with Bloomberg-UTV. A spokeswoman for Starbucks, Trina Smith, said today in an e-mail that it’s “too early” to give a timetable.
New Locations
In addition to working together to source beans for Tata’s Indian facilities, the companies will look to develop Starbucks stores in retail outlets and hotels. Investing in roasting facilities for export will also be considered, they said.
Starbucks is seeking to tap a market where consumption of coffee has more than doubled to 100,000 metric tons from a decade ago. Cafe Coffee Day, India’s biggest coffee-cafe chain, Barista Coffee Co., a unit of Italy’s Lavazza SpA, and rivals have opened more than 1,200 shops in the past 10 years as people in the world’s largest tea-growing nation develop a taste for cappuccinos, according to G.V. Krishna Rau, a former chairman of the state-run Coffee Board.
The Times of India reported last month that Starbucks was in talks with some Indian retailers about setting up shop there. Starbucks was in discussions with Jubilant FoodWorks Ltd., the Indian franchisee of Domino’s Pizza Inc., for a possible alliance, the Economic Times newspaper reported last year.
Increased Exports
Coffee exports from India, Asia’s third-biggest producer, gained 56 percent last year on an increased crop and as demand recovered in the leading importing countries, the Coffee Board said earlier this month.
Tata Coffee and its domestic rivals shipped 292,550 metric tons, compared with 187,326 tons a year earlier, Deputy Director N.V. Nagarajaiah said Jan 3. Exports fetched $644.9 million, up 58 percent, he said. In 2006, Tata Coffee acquired New Providence, New Jersey-based coffee retailer Eight O’Clock Coffee Co. to enter the U.S.
Starbucks’ Schultz is also moving into China, which will be the company’s major growth market in two years, he said in November. The coffee chain aims to increase the number of outlets in the world’s most populous nation to 1,500 from about 400 by 2015.
Starbucks generated 22 percent of its revenue outside the U.S. last year, up from 17 percent in 2007. Profit almost doubled last quarter, helped by increased sales of Via instant coffee and foot traffic in stores. Sales climbed about 10 percent in the year ended Oct. 3, topping $10 billion.
Starbucks rose 21 cents to $32.41 at 4 p.m. in Nasdaq Stock Market trading. Tata Coffee fell 2.85 rupees to 464.55 rupees in Mumbai.
Starbucks and Bangalore-based Tata, Asia’s largest publicly traded coffee grower, announced the non-binding agreement in a statement today. Tata, majority-owned by Tata Global Beverages Ltd., a unit of India’s second-biggest industrial group, has supplied coffee beans to Seattle-based Starbucks, the companies said.
Starbucks Chief Executive Officer Howard Schultz plans to open 400 outlets, of 500 new stores, outside the U.S. in the fiscal year that began in October. Starbucks operates more than 16,800 stores in more than 50 countries, with about one-fifth of its sales coming from non-U.S. locations.
The agreement “is the first step in our entry to India,” Schultz said in the statement. “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.”
The first Starbucks store in India will open in six to seven months, Tata Coffee Chairman R.K. Krishna Kumar said today in an interview with Bloomberg-UTV. A spokeswoman for Starbucks, Trina Smith, said today in an e-mail that it’s “too early” to give a timetable.
New Locations
In addition to working together to source beans for Tata’s Indian facilities, the companies will look to develop Starbucks stores in retail outlets and hotels. Investing in roasting facilities for export will also be considered, they said.
Starbucks is seeking to tap a market where consumption of coffee has more than doubled to 100,000 metric tons from a decade ago. Cafe Coffee Day, India’s biggest coffee-cafe chain, Barista Coffee Co., a unit of Italy’s Lavazza SpA, and rivals have opened more than 1,200 shops in the past 10 years as people in the world’s largest tea-growing nation develop a taste for cappuccinos, according to G.V. Krishna Rau, a former chairman of the state-run Coffee Board.
The Times of India reported last month that Starbucks was in talks with some Indian retailers about setting up shop there. Starbucks was in discussions with Jubilant FoodWorks Ltd., the Indian franchisee of Domino’s Pizza Inc., for a possible alliance, the Economic Times newspaper reported last year.
Increased Exports
Coffee exports from India, Asia’s third-biggest producer, gained 56 percent last year on an increased crop and as demand recovered in the leading importing countries, the Coffee Board said earlier this month.
Tata Coffee and its domestic rivals shipped 292,550 metric tons, compared with 187,326 tons a year earlier, Deputy Director N.V. Nagarajaiah said Jan 3. Exports fetched $644.9 million, up 58 percent, he said. In 2006, Tata Coffee acquired New Providence, New Jersey-based coffee retailer Eight O’Clock Coffee Co. to enter the U.S.
Starbucks’ Schultz is also moving into China, which will be the company’s major growth market in two years, he said in November. The coffee chain aims to increase the number of outlets in the world’s most populous nation to 1,500 from about 400 by 2015.
Starbucks generated 22 percent of its revenue outside the U.S. last year, up from 17 percent in 2007. Profit almost doubled last quarter, helped by increased sales of Via instant coffee and foot traffic in stores. Sales climbed about 10 percent in the year ended Oct. 3, topping $10 billion.
Starbucks rose 21 cents to $32.41 at 4 p.m. in Nasdaq Stock Market trading. Tata Coffee fell 2.85 rupees to 464.55 rupees in Mumbai.
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