Starbucks, the most famous coffee chain in the world is finally all set to enter the world’s second fastest growing country. After trying for the past 3 years and having issues with India’s rules on FDI cap for foreign retail chains, the Seattle based coffee conglomerate is entering India in a JV with Tata Coffee. This should come as an amazing piece of news for coffee connoisseurs across the nation.
The café culture was brought into this country by Café Coffee Day, the Chikmanglur based brand which opened the first café in 1996. Since then it has established 1250 outlets with 150 outlets operating out of Bangalore itself. Add Barista’s 200 and Costa Coffee’s 70 along with new entrants like Aromas, and you are looking at 2000 cr market with 1500 cafés. Now that’s quite a big market, isn’t it? And obviously despite all the regulations in FDI, Starbucks couldn’t sign off this country for long.
In the US, Starbucks is like their Café Coffee Day present at every nook and corner. But in India, they have already indicated that they would initially start their operations by sourcing coffee beans from Tata Coffee’s plantations and set up shop in Tata run Taj Hotels. A good idea obviously because of the high – end premium positioning they have in the minds of the Indian consumers.
Barista and Café Coffee Day have established themselves a great deal in this sector as they were the first movers. This has happened so much so that the customers have become used to staying at a café more for its ambience rather than the product as CCD says “A lot can happen over coffee”.
But then the high end coffee chains like Costa which is one of Starbucks strongest competitors in the UK is planning to increase its number of stores to about 120 by end of 2011. Having an average day sales of Rs. 24,000, it seems to be positioned for strong future growth. Even though Aromas from Australia has also entered this segment, CCD and Barista are tough competition for them.
In such a situation, the question remains on how Starbucks would go about differentiating itself in such a scenario. The fact that India as a country is so vast and everyone has equal opportunities should make sure that they would necessarily carve a niche for themselves. Their quality, style and sense of service would definitely improve the café culture in the country.
In the long run, the importance they give on branding, customizing their products for the Indian palette and their positioning would surely be closely watched! What do you think – Can Starbucks be popular in India?