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February 22, 2013

Starbucks in India

Culture, as we all shall agree, is the melting pot of various influences. And what can be a better example than our country, India? Mother India has been open to one and all; and continues to do so by having a welcoming market for all consumer products brought in by various brands from all over the world. The recent waves of globalization have made it possible for a company to enter the Indian market, and reach out to the customer. With rising incomes and better economy, the Indian consumers have embraced this trend with a “bear hug”.

The Coffee experience that used to be and the Times of Change

Coffee, along with tea, is one of the traditional beverages of India from times in memorial. And until recent times, Indian companies such as Bru, Sunrise and Nestle were brands of coffee familiar to the Indian consumers. Coffee was a drink that was served at home; at office and at restaurants around which the lives of a large number of Indian citizens would revolve: over discussions, at work, while studying, trying to keep sleep at bay and more.

Few coffee parlours existed, but they were at a very local level where few snacks and other beverages were also served. The next door coffee shop underwent a paradigm shift with the arrival of Barista and Café Coffee Day. The youth had a new place to hang out with friends and even family – over cups of coffee and a variety of snacks. Hot coffees became “Cappuccinos”, cold coffees became “Lattes”, and so on.

Starbucks Corporation have entered the Indian market in 2012 in joint venture with the Tata Group, a name that is familiar to every Indian. Tata Global Beverages and Starbucks have branded their product as “Starbucks Coffee: A Tata Alliance”. All stores shall be owned by this joint venture company.

Entry to India

Launching a chain of stores have been on the minds of Starbucks Corporation for long. The company is faced with a challenge to make its own mark in a market that is dominated by two very large players, Barista and Café Coffee Day, both of whom have number of stores all over the country. They have realized that while the Indian consumer is ready to pay for a quality experience over coffee, there awaits stiff competition in the market.

The joint venture (JV) with Tata Global beverages has been a strategic decision to capitalize on the goodwill and local knowledge harboured by the Indian partner in the hearts and minds of the potential customers. In order to optimize the costs, the raw material shall be procured locally through Tata Coffee, the largest coffee plantation in Asia.

The first store    

The debut is always special, for every individual or company. In a completely new market, Starbucks Coffee have positioned itself in a large property of about 4500 square feet in Elphinstone Building, Horniman Circle in a posh colony in South Mumbai. The flagship store has breathtaking interiors in high quality woodwork; teak furniture and can accommodate as many as 120 customers. There are leather bound books to create a déjà vu – a feeling of the bygone era. The store has been designed by Indian designers, who have incorporated local elements. For example, there are scaled down models of traditional milk cans that are used by milkmen in Mumbai.

Howard Schultz, Chairman and CEO of Starbucks Corporation have also insisted on having “Indian influences” on the menu. So you have elaichi flavoured coffees, mewa snacks, paneer delicacies, etc alongside Western palettes.

Adapting to the nightlife of residents of Mumbai, the store remains open till 11:00 PM from Monday to Thursday, and till 1:00 AM on weekends.

The Expansion Plans

The vision of Starbucks is to have a presence in all premium locations in India and the target is a clientele who can pay that extra bit for a good experience. The first phase of the expansion plans include new outlets in Mumbai and Delhi.

The chain is moving in that direction with recent additions at Taj Palace Hotel and Oberoi Mall in Goregaon, in Mumbai and Terminal 3 of Indira Gandhi International Airport, New Delhi.

Customer Reactions

The feedback from customers in India have been very encouraging. People have loved not only the customizable beverages and platters, but also the warmth each store exudes. Consumers are able to leave their stresses and worries outside and relax, enjoying their order and carrying back a very cherishable experience.

Future Strategy

The strategy for expansion in India has perhaps been adopted from Aesop’s fables – “Slow and Steady”. The company shall carefully launch outlets in other metropolitan cities and into Tier II cities thereafter. The vision is to survive long term in the Indian market, which constantly throws up new opportunities as well as challenges.

Contribution to Society

Tata is a name associated with social responsibility. The traditions have been continued even in the venture with Starbucks Corporation. The vision of the JV is to work towards developing and improving the profile of Indian-grown arabica coffees around the world by elevating the stature of Indian coffee, as well as improving the quality of coffee through sustainable practices and advanced agronomy solutions”.

The betterment of the quality of lives of the human resource employed at coffee plantations and coffee growing community in general is on the prime agenda of this Tata – Starbucks company. Capacity building through promotion and training of responsible farming practices, milling techniques, knowledge sharing by experts from round the world, shall be undertaken. Also, the company would support schools for children as a part of fulfillment of their social responsibility. This shall also include children with special needs.

The workforce at Starbucks outlets are mainly Indian, thus creating a large pool of job opportunities for the Indian youth.

On the whole, the future of Starbucks Coffee in India appears very promising – a result of keen preparations made by studying the Indian consumerism patterns and market trends. The strategic alliance with Tata has also proved successful. 

Tags : Starbucks, Tata, Coffee

About Anupama

A Transport Planner and Architect, Anupama has been blogging for about six years now. She has taken up professional content writing for the last two years, and can always be contacted for any assignments or queries. Her strength is original presentation of any topic.