Starbucks in India

HOW TO BREW A SUSTAINABLE BLEND FOR INDIA

Starbucks entered the Indian market in October 2012 with a 50:50 joint venture with Tata groups. The Indian coffee market is a highly potential market even with high competition, with an 80% increase in consumption in a decade the company was confident in the business. Tata’s name helped the company to gain an Indian’s trust. The complex Indian market has a lot of competition in the coffee business with the biggest competition - Cafe Coffee Day(CCD).

To take the market, the company has to provide competitive pricing with a starting price of Rs.100, this price even looks premium that the company has to open its stores in premium places of the country which limited its coverage. High real estate and rental costs along with competitive pricing made it difficult to get back the company’s initial investment.

In 2012 the company entered the Indian market with $80 million. With CCD being the market leader making its presence in the younger working-age bracket, Starbucks should do something to capture the market. The company focused on a premium market with high profile, business-friendly locations. In the 2014 shareholder’s meeting, the company had already opened 50 stores all over India.

The themes used by the company to enter a market are

1)Be Tactful in Marketing the Brand

2)Find a Good Local Partner

3)Make a Long Term Commitment.

Starbucks makes excellent work in penetrating the market starting with the selection of premium places and then finding perfect local partners, being partnered with a local company improves the customer's trust and market understanding for the company. Selection and training the employees are the main things that the company is not compromising with. Starbucks believes that its employees are the face of the company, they are the ones providing the Starbucks experience. The company made all the employees partners by giving all of the shares, employee benefits are another main focus of Starbucks. The domestic competition CCD was the company’s biggest threat. CCD started in 1996 with the name of cyber cafe, focused on giving customers a world-class coffee experience at a low cost, this attracted a lot of Indian young people who had less money to spend on coffee. Cafes are the main places in India to socialize, the majority of Indians are against socializing in a bar, coffee shops are the only decent option. The CCD coffee network was strong that the coffee price flection in the international market will not affect the price in India, hence the company was able to provide coffee at a low price when all the other competing companies struggle to keep the price stable. Other than the traditional competitions, quick-service restaurant companies like McDonald’s and Dunkin Donuts seems to be a threat. These companies have the advantage of using existing establishments. The QSR is capable of giving the same product at a low price when compared to Starbucks. Starbucks’s business may sound simple, but maintaining the same taste of the coffee that tasted the other day, making the coffee that tastes identical to the one that is available abroad, providing the Starbucks Experience to every customer are some of the very challenging tasks. The challenges that are before Devda and the company are different, for long-term success the company has to focus on the stable Indian market other than only the high profile market.

Have a great day :)