The Mecca of Coffee Comes to India

Buried under the pillow on a sleepy Monday morning, I woke up to a cup of hot coffee only to read the most delightful news for any caffeine lover in the country – “Starbucks to venture into the Indian coffee market”. Orgasmic!! The news had all bean lovers across the nation, including me, dancing with joy.

Starbucks, the undisputed heavyweight champion of the coffee industry has finally given up on staying away from India. The company is now in a 50/50 partnership with Tata Global Beverages and has plans to open 50 outlets across India by the end of 2012; provided the doomsday of 21st December doesn’t become a hindrance.

The Seattle based company, although a big player across the globe; treads on a serious footing before investing into the great Indian coffee bazaar (a potential crowd greater than US, Brazil, Great Britain, Australia, South Africa, Mexico, France, Italy, Germany and Indonesia combined). It is believed that while the rest of the coffee makers were busy brewing flavours to suit the Indian taste, Starbucks was waiting for the FDI (Foreign Direct Investment) roads to open. Their announcement to set up a market in India came two months after the scam-struck government fumbled an effort to allow 100 percent foreign investment in the single-brand retail sector.

Ironically, even after the FDI clearance, the company was uncertain enough to partner with Tata Global Beverages before making investments in the doldrums of Indian economy. This also comes as a surprise as Starbucks has never been in a joint venture before, even in the large scale Chinese market, of which it is now a leader.

“When we started the discussions with Tata, we talked about sourcing and roasting of coffee, and as we began to learn more about the company, we saw a company that shared similar values and principles of business. And because of that we decided to open a café chain together”, said John Culver, the President of Starbucks’ International business, in an interview to ETNOW.

The success of Starbucks in the Chinese market has truly been remarkable, but it certainly won’t be that easy to please the chai loving taste buds of India, given that the coffee giant also faces stiff competition from other foreign players – Costa Coffee, Barista and Dunkin’ Donuts.

The company’s target in India would be to attract the educated middle class, which has an Anglo bent and represents the likely Starbucks converts.

To tap into its potential customers, Starbucks would have to innovate and localize its products, a strategy aggressively followed by McDonalds. On the other hand what also remains an interesting watch is the company’s pricing for its cost conscious Indian clients.

“We focus on the experience that we provide to our customers. We will provide the quality that doesn’t exist here in India and this is going to resonate with the India consumers”, said John Culver, when asked about the pricing issue.

Well sir, all we hope for is that along with the delightful experience of a Starbucks coffee, our pockets also have an economically viable time.

Arjun Tuli

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