Demand beyond metros signals changing consumer behaviour: Mitali Maheshwari, Starbucks

India’s rising appetite for premium coffee in tier 2 and 3 cities is beginning to reshape how global café chains approach growth, experience and consumer engagement. 

For Tata Starbucks, the shift signals not just geographic expansion but a deeper cultural adoption of coffee as an experience-led category, even as the business continues to grapple with profitability pressures.

In an interaction with exchange4media, Mitali Maheshwari, CMO, Starbucks India, spoke about how the brand is evolving its marketing, experience and influencer strategy, while sharpening its premium positioning through Starbucks Reserve.

‘Coffee is no longer just a beverage’

Maheshwari said the rise of premium demand beyond metros is a clear indicator of how consumer behaviour is changing across India.

“Starbucks has not expanded only in metros. We are in more than 81 cities right now in India, which means that it is all across, whether it be metros, tier one, tier two or tier three cities,” Maheshwari said.

Maheshwari added that coffee consumption is increasingly tied to occasions and connections rather than just utility.

“It’s not just a beverage anymore. It’s a moment where consumers choose to bond. Families meet, people come for dates, office meetings, and for studying. There are so many occasions,” Maheshwari noted.

The macro data supports this shift. India’s coffee market is projected to grow at a CAGR of 7.56 percent between FY2026 and FY2033, expanding from USD 1.05 billion to USD 1.88 billion. 

The branded café segment is also scaling rapidly. Project Café India 2025 estimates the market added 600 outlets, up 12.7 percent year on year, to reach 5,339 stores.

Expansion push, profitability pressure

For Tata Starbucks, this demand is translating into aggressive expansion. According to Tata Consumer Products’ latest annual report, the company added 58 net new stores and entered 19 new cities in FY25, taking its footprint to 479 outlets across 80 cities. It is targeting 1,000 cafés by FY28.

However, the scale-up is weighing on the bottom line. Tata Starbucks’ net loss widened to Rs 135.7 crore in FY25 from Rs 82.16 crore in FY24, even as revenue rose 5 percent to Rs 1,277 crore.

The numbers point to the cost of building a premium café network in a still-evolving market, particularly as the brand expands into newer cities where consumer throughput and store maturity take time.

Maheshwari did not directly comment on financials, but maintained that the focus remains on building accessibility and relevance across markets.

Crafting Starbucks Reserve as a distinct experience

While Starbucks continues to scale its core network, the Reserve format plays a different role in the brand’s portfolio, with a sharper focus on experience and craft.

“At every Starbucks and Starbucks Reserve, we want to make sure we have the best experience, the best environment that feels like a third place and we serve the finest quality coffee,” Maheshwari said.

“What happens differently at a Starbucks Reserve is in the smaller nuances. It’s about owning the space and bringing together the vibe of the city, the culture of the city, and weaving that into the coffee and the craft,” Maheshwari added.

Maheshwari further said that the format was designed to be immersive, with design, menu and partner interactions reflecting local context. The Delhi Reserve store, housed in a heritage building, is an example of this approach.

“It’s about bringing the nuances of coffee to life through design, through menu, through partner interactions. The more time you spend at a Starbucks Reserve, the deeper and more immersive that experience becomes,” Maheshwari said.

Premiumisation and evolving consumer spend

The growing willingness of consumers to spend more on coffee is creating headroom for premium formats, even as competition intensifies.

“Today, consumers care for experiences. If a product or an experience is doing justice to it, they don’t mind paying for it,” Maheshwari said.

Maheshwari positioned Starbucks Reserve as a differentiated offering in this context.

“I wouldn’t necessarily compare Starbucks Reserve to any of the players because the entire offering, both from a product as well as an experience perspective, is elevated,” Maheshwari noted.

The format brings together small-lot coffees, including Indian origins, an expanded menu with zero-proof and health-forward beverages, and locally inspired food, alongside storytelling-led service through coffee masters.

At the same time, the competitive intensity in the segment is rising, with multiple specialty coffee chains expanding across metros and non-metros alike, often with sharper pricing or localisation.

Marketing: experience first, digital as enabler

Maheshwari outlined a marketing approach that leans heavily on experience while using digital and influencers to drive discovery.

“Even a simple coffee tasting can change the way you look at something. That’s the best way to experience the brand,” Maheshwari said.

However, Maheshwari acknowledged that discovery today is largely digital-led.

“We are living in an age where news reaches you at home first. That’s the role that digital plays. If people get to know about Starbucks, it builds a presence in their mind, and at some point they will come and experience it,” Maheshwari added.

The strategy, therefore, is to combine creator-led awareness with on-ground experiences that build long-term affinity.

“That experience has a much more long-lasting impact than any digital marketing,” Maheshwari said.

Discounting and loyalty

As discounting and trial-led consumption become more common in the category, Maheshwari said Starbucks is relying on experience and familiarity to drive retention.

"This I feel is a circle where people always come back home. Its a space and a connection that you have at Starbucks", Maheshwari said

Maheshwari added that while consumers may experiment with other brands, the category itself has enough headroom for multiple players.

“There is so much demand and so much room for everyone. Even if someone tries something else, they will come back,” Maheshwari noted.

For Starbucks, the emphasis remains on building a sense of belonging anchored in its ‘third place’ philosophy rather than competing purely on price.

Summing up Starbucks’ identity, Maheshwari described it as, 'The best farm to cup experience that you can have, thats handcrafted for you.'