Tata Coffee shares surge on Starbucks tie-up report

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Shares in India's Tata Coffee soared nearly 10 percent on Monday after media reports that a proposed tie-up with giant US chain Starbucks will be announced soon.

Tata Coffee, a grower and supplier of high-quality Arabica beans, jumped 9.8 percent intraday to a day's high of 881.75 rupees on the Bombay Stock Exchange.

The surge followed a report in the Times of India that Starbucks was set to open its first cafes in the fast-growing Indian market. The two companies had announced a deal in January this year.

Seattle-based Starbucks has for years been eyeing the Indian market, where large US food and drink giants such as McDonald's, Domino's pizza and Pizza Hut have already established a strong presence.

The Times of India, quoting unnamed sources, said Starbucks had approached other potential Indian partners, including fast-food chain operator Jubilant Foodworks before deciding on Tata Coffee.

India has traditionally been a nation of tea drinkers but economic growth in recent years has led to a shift in preferences, with Western-style coffee shops a major attraction.

Tata Coffee and Starbucks could not be immediately be reached for comment. Costa Coffee, part of Britain's Whitbread hospitality group, and US-based The Coffee Bean and Tea Leaf are already well established in major Indian cities.

Indian chains Barista, which has a tie-up with Italy's Lavazza, and Cafe Coffee Day, are also popular. All are promoted as sophisticated marks of affluence and good taste in the class-conscious nation.

The Times of India said the Starbucks-Tata Coffee deal would also be backed by other bigger firms within the salt-to-software Tata group.