Starbucks has recently made the decision to expand their operations into the rapid growing markets of India. The firm will be heading this venture with the Tata conglomerate, investing an initial $78-million. Starbucks currently dominates the north American and European coffee and tea markets, with less influence in the Asian regions, especially China and India.
I personally think that this is a very good decision on Starbucks’ behalf. Even though India is primarily a tea-consuming nation, the introduction of upscale cafes in larger cities will be met with open arms as rising income levels in India is leading to overall lifestyle changes.
Starbucks will be facing well-established competitors such as Indian-owned Café Coffee Day, Britain’s Costa Coffee and US rival Coffee Bean & Tea Leaf. One competitive advantage Starbucks has is the partnership with Tata Coffee as primary source for coffee beans. Using locally grown products will ensure a tailored taste as well as effective shipping, manufacturing and production costs.
Starbucks has built a strong infrastructure in the span of forty years at home in north America, which is extremely vital for moving into international markets. Based on market trends, the most critical key to Starbucks’ success in India is approaching the market slowly. Testing the waters, and working with feedback before making major decisions such as the opening of new stores. It has to be kept in mind that the consumer palette and taste preference will be very different than those in the North American regions. It has to be determined if the Starbucks brand will be able to remain loyal to it’s image and satisfy the new tastes of the Indian market at the same time.
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