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Starbucks May Enter India After All

Posted: Monday, 06 February 2012 18:05

Starbucks May Enter India After All

Feb 06 : After dilly dallying for a couple of years Starbucks announced last week that it is entering India in a JV with the Tata Group to set up cafes around the country and sell Indian coffee globally while in its home market in the USA it plans to start selling wine and beer at select locations in Atlanta and Southern California also by the year-end..

The Seattle-based coffee stores chain has set up a JV with Tata Global Beverages Ltd., which already owns Eight O’clock Coffee in the U.S. The two companies will start in India with an investment of $80 million with a plan to add 50 stores within this year.

The first stores in India are set to open in Mumbai and Delhi this summer. Although tea has deep roots in India, the youth have developed an affinity towards coffee, the shift in culture resulting in doubling of consumption in the previous decade. The youth are willing to pay not only for coffee as a beverage but also for the experience.

Starbucks may be a house-hold name in the USA but it will face a formidable competition from local chains like Indian-owned Café Coffee Day that sprang up a decade ago and today already has over 1,200 cafes in around 200 cities including airports and small hotels. Foreign competitors like Italy's Lavazza with several Barista cafes are also well established. Interestingly Tata had invested in this venture when it bought stakes from the original promoter Amit Judge but later sold its shareholding.

The coffee experience becomes Starbucks Experience at the Starbucks stores and the company is always looking ways to enhance it by getting feedback from the customers. Clarice Turner, senior vice president of the U.S. Operations announced last week at the same time when the announcement for India JV was made, “We’re pleased with the response of our customers to the introduction of wine, beer and premium food at several of our stores in the Pacific Northwest, and we’re excited to see how the idea translates to other markets.”

Since first introducing the evening day-part concept at its Olive Way location in Seattle in October 2010, Starbucks has been successfully creating new concept for customers through an expanded food and beverage menu in the evenings (delWine has been writing regularly about these developments as they relate to wine consumption growth potential). Five stores in the Seattle area and one in Portland, Oregon currently serve wine, beer and premium food. In November last year, the company had announced plans to bring the concept to five to seven locations in the Chicago area by the end of 2012. Atlanta and Southern California will each see four to six stores, also by the end of the year

The wine and beer list will be hand-selected to reflect local customer tastes and preferences, and will be refined over time.

Starbucks Coffee Company was founded in Seattle in 1971 and has been sourcing and roasting very high quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world.

While the company has not given any indication of serving wine and beer at its operations in India right way, it would have its work cut out to set up the cafes within the framework of law and social customs. It would want to quickly capitalize on the global  branding to establish itself as a premium café company. Although a few popular outlets at Narula’s and Barista have already started serving wine and beer on an experimental basis, Starbucks may look at the pros and cons more closely before moving into the uncharted territory in India.


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