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Starbucks enters India in JV with Tata

31-January-2012
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Starbucks enters India in JV with Tata

After months of speculations and talks about their partnership plans, two global beverages brands – Tata Global Beverages and Starbucks Cafes – have formally announced their joint venture. The 50/50 joint venture, named Tata Starbucks Ltd, will own and operate Starbucks Cafes in India and will be branded as Starbucks Coffee ‘A Tata Alliance’.

John Culver, President of Starbucks in China and Asia Pacific, informed that the company would commence its operations across India soon, beginning with retail outlets in Delhi and Mumbai.

Starbucks, whose entry into the Indian market is being anticipated to bring about a big turnaround in the beverages and quick-service restaurant category in India, has also made it clear that it would serve the beverages category, but would expand across all possible offerings of the segments. In the first phase, the company plans to open a minimum of 50 stores in the first year.

Starbucks Coffee Company and Tata Coffee Ltd have also agreed to jointly leverage assets and innovations to offer a premium tea product, branded as Tata Tazo. When asked whether Tata’s alliance with PepsiCo in the beverages category would pose a challenge or would there be a blurring of lines between the two JVs, RK Krishnakumar, Vice Chairman, Tata Global Beverages, said, “I don’t think that the lines will get blurred. The association with PepsiCo is in the bottled beverages category, which serves the top, middle and bottom segments of consumers.”

Starbucks, a leader in the beverages category, is widely known for its offerings of high quality Arabica coffee and handcrafted beverages globally. The company is poised to experiment with the diverse local food flavours.

Marketing Strategy
While the partners mostly discussed the nature of partnership and their expansion plans in India, when asked about the larger marketing strategy for India, Culver replied, “We want to offer a premium experience to consumers of beverages in India. The success of Starbucks around the world has shown that consumers do look for enriched, premium experience in this segment.”

The JV will open retail stores not just utilising Tata properties, but also other areas to attract consumers, including at airports, railway stations, shopping malls, food joints and colleges.

While the company plans to target the top end of the Indian market initially, its expansion plans also target the B and C towns. Starbucks, which has a target of 3,000 stores in the near future in the Asia Pacific region, will undertake an intense marketing plan for India.

“We see tremendous potential in the Indian market where penetration of growth is deeper, unlike in China, where penetration of growth is not as uniform. I do not a see a reason why we should not grow in India,” Cluver remarked.

With support from its partner Tata, which has a stronghold in the Indian market, Starbucks also plans to bank heavily on the unique position, local knowledge and expertise of the Indian scenario of its counterpart.

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