1. Starbucks India: Brewing growth into coffee cups

Starbucks India: Brewing growth into coffee cups

Five years and 100 stores later, Starbucks continues to focus on growing its footprint in India as it launches in Kolkata, while introducing some new initiatives for growth.

By: | Published: November 7, 2017 2:26 AM
starbuck, starbucks growth, starbucks india business growth With a rapidly growing middle class, coffee consumption has grown by 40% over the last decade — an opportunity Starbucks India aims to capitalise on.

Five years and 100 stores later, Starbucks continues to focus on growing its footprint in India as it launches in Kolkata, while introducing some new initiatives for growth

India represents a significant opportunity for global coffee chain Starbucks which operates in the country under a 50-50 JV with Tata Global Beverages. With a rapidly growing middle class, coffee consumption has grown by 40% over the last decade — an opportunity Starbucks India aims to capitalise on. Present in India for half a decade and operating 100 stores across six cities, the chain is gradually expanding its presence in newer markets besides driving various initiatives like social impact programmes and increasing diversity at the workplace.

John Culver, group president, Starbucks International and channel development mentions, “The China and Asia Pacific (CAP) region remains at the forefront of our global growth for Starbucks, and India is an important market with significant long-term growth opportunity.”

To bring the Starbucks experience to more customers, the chain is expanding its presence and entering Kolkata early next year with three stores which will reflect Starbucks’ coffee heritage. Currently, Starbucks stores are located across Mumbai, Pune, Hyderabad, Chennai, Delhi and Bengaluru.

With India not being a major coffee consumer, the coffee culture has only started to develop over the last few years through the entry of several global players and homegrown chains like Café Coffee Day (CCD). However, the market has not been a viable one for many, with global players like Gloria Jean’s making a quick exit in 2014.

Starbucks is focussed only on urban markets through a strategic store presence and unlike some of its competitors, does not consider the burgeoning middle class in smaller markets. However, Culver states, “We look forward to announcing more store openings soon in cities where we already have a footprint, as well as new cities. We are committed to growing our footprint across India and we look forward to continuing our growth in a disciplined way.”

Interestingly, Tata Coffee has invested in infrastructure to build capabilities for roasting and packaging facilities in Kushalnagar in Coorg, Karnataka. While it presently roasts green coffee for Starbucks India Estates Blends, Italian Roast and Sumatra, the company states the facility will soon expand to Kenya coffee as well. But for Starbucks in India, it isn’t just about coffee, with almost 25% of the sales coming from food products, which is the maximum for Starbucks anywhere in the world.

As a result, the coffee chain has introduced several localised food and beverage options including Murg Kathi Roll, Tandoori Paneer Sandwich and the Alphonso Mango Frappuccino, besides launching its specialty tea brand — Teavana. In fact, no two Starbucks stores are alike in design, with each store having a unique representation of the area it is present in.

“Food is an important part of our Starbucks offering across all markets and we see it as a significant growth opportunity for the business, including in India,” highlights Culver adding, “We reinforced our commitment to the Indian coffee market with the creation of India Estates Blend in 2013. This year our customers enjoyed our Diwali exclusive beverage, the Saffron Truffle Mocha.”

Additionally, in its 75 markets globally, the chain intends to make a positive impact in the communities that it operates. “While our 330,000 partners around the world are connected by Starbucks Mission and values, each market has its own distinctive needs and we seek to support our customers, partners and local communities in ways that are relevant and meaningful,” he adds.

To support Indian partners, it has instituted a five-day work schedule, down from the country’s customary six-day work week. It provides partners with more flexibility and an additional 52 personal days off per year. While its present women workforce comprises 25% of its total staff, the coffee chain looks to take that number up to 40% over the next five years.

However, in a bid to achieve profitability, industry experts feel the coffee chain needs to invest more in the market in terms of width and depth. With competitors like Dunkin’ Donuts and Café Coffee Day, which has, in fact, also extended its business model to include home delivery, customer acquisition could get tougher. But Culver says, “We appreciate that some of our customers want the convenience of enjoying their coffee on-the-go. We continuously look at how we are innovating on the customer experience.”

In fact, India was reportedly the only market to launch the My Starbucks reward programme within two years of the brand’s launch. Its mobile app, launched across the country in March, gave customers a quick way to pay for in-store purchases using their mobile device. “As we open more stores, we hope to make Starbucks a part of more Indians’ daily rituals,” Culver sums up.

Chandni.Mathur@expressindia.com

@chandni_mathur

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