Starbucks, the iconic coffee brand of America, is all set to storm Indian market soon.
THERE is great news for all those coffee lovers in India as soon they would be able to sip a cuppa of their favorite Iced Caffè Mocha or Caramel Frappuccino® Blended Coffee, everyday! This is no daydreaming; it is indeed going to be a reality as the iconic coffee brand, which revolutionized coffee-drinking in America, has signed a Memorandum of Understanding (MoU) with Tata Coffee, for sourcing and roasting high-quality green coffee beans in Tata Coffee’s Coorg, India facility. Besides, the alliance will also set up Starbucks retail stores in Tata Group’s retail outlets as well as luxury hotels.
Headquartered in the United States, in Seattle, Washington, Starbucks manages over 16,000 stores and operates in more than 50 countries. Starbucks sells a wide variety of coffee and tea products with a range of complementary food items, primarily through retail stores. Tata Coffee is the world’s largest integrated coffee plantation company and owns key brands such as Mysore Gold instance coffee, Mr. Bean and Coorg Pure and also owns Eight O’ Clock Coffee Company in the US.
Surprisingly, India is the major market which remains untapped for the coffee giant, which is scouting for growth outside its home market, i.e., the US, where it is experiencing stagnating growth. Starbucks which operates in 50 countries is already present in B, R, C of BRIC nations. Hence the passage to India was long over due. But the country’s stringent FDI laws related to its retailing industry caps foreign direct investor’s stake at 51% in single-brand retail format and which might have acted as a deterrent to the coffee retailer’s India entry plan.
Nonetheless, explaining his vision for Indian market, Howard Schultz, Chairman, President and CEO, Starbucks Coffee Company, quipped, “India is one of the most dynamic markets in the world with a diverse culture and tremendous potential.” He further added, “This MoU is the first step in our entry to India. We are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations.”
What could work in favor of the alliance is the fact that both Tata Coffee and Starbucks have known each other for long as the former has supplied premium coffee beans to the US partner Starbucks in the past. The alliance partners are expected to open their first outlet within six months. “We welcome Starbucks entry into India because of both its unique experience with the store format and for its commitment to society, values that we share,” said R K Krishna Kumar, Chairman of Tata Coffee.
Though late to enter the fast growing Indian market, the world’s leading coffee retailer is optimistic that India would soon catch up with China. India is “as large an opportunity as there exists in the world, coupled with China,” the Financial Times quoted Schultz as saying. Coffee consumption in India though has lagged behind tea, which remains the favorite hot drink of a majority of the people, is slowing growing up. In fact, according to the data from Coffee Board of India, the domestic consumption almost doubled from 50,000 metric tones in 1998 to 94,400 metric tones by 2008, the latest date for which the data is available.
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