Starbucks optimistic on India

8 February 2013

NEW DELHI: Starbucks, the coffee house chain, expects India to become one of its top five markets, a process that will require a major investment to increase its current network of just seven stores.

The firm's joint venture with Tata Global Beverages recently opened its seventh Indian branch, based in Delhi. "Over the long term, we want to have many stores here," John Culver, Starbucks' president for China and Asia Pacific, told Money Control.

He added that this expansion would be "aggressive, yet thoughtful" as the country attempts to gain ground on its most valuable outlets, which today are in the US, Canada, Japan, China and the UK.

"We see India as potentially being one of the top five largest markets that Starbucks operates in over the long-term," he said. "There is a tremendous opportunity for Starbucks to grow ... We are committed to India for the long-term."

In January last year, Tata and Starbucks predicted they might open 50 branches in India during 2012 as a whole. Despite missing this target, Culver argued it was not a "late" arrival in a crowded market.

"We are not at all late," he asserted. "There's an emerging middle class, rising disposable income and a nascent café culture that is developing 20% every year ... so we believe the time is just right."

Upon assessing the progress made to date, Culver suggested Starbucks' products, and its aim of providing a "third place" – alongside home and work – were resonating with consumers.

"The strong pent-up demand for Starbucks coffee in India surprises me. The surprise is that consumers from all walks of life have been visiting our stores — young, old, couples, families, singles. The coffee we serve here is the same as that in the US," he said.

One component of its success thus far has been tailoring its design template to suit the local market. "We want to create unique spaces and don't want all of our stores to look the same," said Culver.

Providing bespoke menu options is another key tactic, including offerings like Lal Achari Mirch Turnover, Murg Kathi Wrap, and Reshmi Kebab Roll, sourced from TajSATS, Tata Group's catering unit.

Corporate social responsibility is also a core goal, especially in the form of "giving back" to the communities where it is present, in order to build meaningful bonds with customers.

"It is important that we grow our business in a very respectful way, in a way that earns the customers loyalty, earns their trust and ultimately earns their business," said Culver.

Data sourced from Money Control, Wall Street Journal, Economic Times; additional content by Warc staff