How Starbucks Made An Alliance With TATA For The Indian Market?
The Starbucks outlets in India are known by “Starbucks: A TATA Alliance”.
TATA Starbucks Private Limited is a Joint Venture company between TATA Consumer Products and Starbucks Corporation which brings unparalleled experience to Indian customers. Starbucks made an alliance with TATA for the Indian Market.
The Joint venture company opened its first store in 2012 and as of now, it has more than 170 stores all across the country. It was for the first time in Starbucks’ history, the company pinned its faith on a partner-owned roasting facility.
In this article, we gonna have a look through the journey of Starbucks in India i.e its entrance in India, partnership with TATA, its localization methods for the Indian market, mutual benefits of the companies, and their international ventures.
History
In January 2011, TATA Coffee and Starbucks corporation announced their plans for opening Starbucks outlets in India. Earlier in 2007, Starbucks had planned to enter the Indian market with a partnership with Kishore Biyani’s Future Group but the deal couldn’t become successful for unknown reasons.
The Joint Venture is a 50:50 partnership between both the companies.
On 19 October 2012, Starbucks opened its first store in India, measuring 4,500 sq ft in Elphinstone Building, Horniman Circle, Mumbai
Features
All the espressos sold in Starbucks’s Indian outlets are provided by TATA coffee.
According to the part of the deal, Starbucks and Tata Coffee Limited will work toward developing and improving the profile of Indian-grown Arabica coffees around the world by elevating the level of Indian coffee.
The Joint Venture company will also work on improving the quality of coffee through sustainable practices and advanced agronomy solutions.
Starbucks never compromises on its location and always locate itself on high traffic and premium locations. Most of the stores are in Tier 1 cities (Mumbai, Delhi, Pune, Bengaluru, etc) major airports, and TAJ’s hotels and resorts.
In India, the prime target for Starbucks is the younger generation within the age group of 16–40 years.
As Indians, we always have an aspiration for western culture and their lifestyle. Along with its western aspirational brand, Starbucks inculcates an essence of Indian local culture in its brand for India.
Starbucks has also launched its delivery program, according to which they will provide home delivery from Starbucks outlets through its partnership with Swiggy.
In the same year, CEO Navin Gurnaney announced that Tata Starbucks would transition to using only compostable and recyclable packaging materials across all its stores from June 2020.
Adapting To The Indian Market
Starbucks has a history of adapting localization for its expansion in the foreign markets. Eg.India, China, Japan, South Korea, Saudi Arabia, and much more.
Starbucks localization strategy is a mix of local products with innovative store designs, so they can fully adapt to the culture of the location. It maintains 18 design centers worldwide, which work to understand and conceptualize store designs to reflect the local market.
Starbucks in India is localizing its brand and adopting the Indian culture in the following ways.
Design Of Stores
Starbucks made the design of the stores very Indian. The main motive behind it was to make Indians comfortable and have a community feeling inside the outlets.
Mumbai stores have wooden tables with wooden carvings and Pune stores have copper artifacts that honor the copper culture of Pune.
Similarly in Delhi, the stores have the ropework design which was heavily influenced by the local culture.
Introduction Of Indian Flavour
We Indians have the habit of eating along with coffee/tea. So, Starbucks has introduced Indian dishes like Konkani Twist or a Reshmi Kebab Roll in their menu along with other tried and tested muffins and sandwiches
As we Indians prefer tea more than coffee. Hence, Starbucks have introduced Tata’s branded tea called Teavana and Himalayan water beverages to add to the products.
Due to the introduction of these food items in their menu, the revenue from food and beverages is more than 35% in India which is more than 20% higher as compared to the USA.
Keeping Competitive Price
Starbucks kept its price competitive in India as compared to its competitors like CCD, Barista, etc as India is a price-sensitive market. One of the major ways with which Starbucks minimizes its cost is by the help of TATA.
All the Starbucks coffee available in the Indian market is supplied by TATA Coffee. As a result, Starbucks saves a lot of money by not importing coffee.
Mutual Benefits
Starbucks is a quality-driven organization and the same is TATA. Both are very reputed companies and are the leaders in their industries.
But in a Joint venture, a company is very thoughtful while selecting its partner where both can get benefitted from each other’s strength.
Due to the Joint venture, Starbucks corporation, TATA Group, and the Indian Consumers are benefitted a lot in the following ways.
Benefits of Starbucks
- Exposure to a large Indian market.
- Decrease its dependence on its primary US market.
- Availability of high-quality Arabica coffee by TATA Coffee.
Benefits of TATA
- The deal allowed TATA Coffee to provide roast coffee to Starbucks.
- Growth opportunity in international markets due to the Starbucks network.
- TATA became Asia’s biggest publicly traded coffee grower.
Benefits of India
- The company employed a large number of people across India.
- Growth in demand and sustainability of India’s Arabica coffee.
- Indian consumers got a taste of foreign brands blended along with the taste of India.
International Ventures
The Tata Group and Starbucks Corporation have also collaborated on many ventures outside India.
Starbucks Reserve Tata Nullore Estates is the first-ever Starbucks Reserve coffee which is sourced exclusively from India which became the first Indian coffee to be roasted and sold at of Seattle in 2016. The coffee was later rolled out across Starbucks outlets in the United States.
In the same year 2016, Starbucks began selling Himalayan bottled mineral water at its outlets in Singapore and also began retailing its products onboard all flights of Vistara which is a joint venture between the Tata Group and Singapore Airlines.
Starbucks CEO Howard Schultz has voiced his admiration for industrialist Ratan Tata’s “grace” and wisdom. Howard said that he was moved by Tata’s words during the launch of the first-ever Starbucks store in 2012.
Howard Schultz has even written an essay named “Reimagining INDIA: Unlocking The Potential of Asia’s Next Superpower”.
Conclusion
In this article In this article, we discussed upon the entry of Starbucks in India, its partnership with TATA, its localization methods for adopting the Indian market, and the benefits for each one through this Joint Venture.
According to me, Starbucks chose the right partner for its journey in India.
TATA has the expertise of doing business in India. It also understands the Indian market very well and has a proper ecosystem in India.
But, Starbucks has to be aware of its competitors such as Cafe Coffee Day and Cafe Barista to survive in the Indian market.
Have you ever been to Starbucks?
Did you love it?
What is your experience?
Comment below.
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