Six years into India, and the coffeehouse chain is gung-ho about further expansion.
Sustainability is the buzzword for many brands today but for Starbucks, it is a focussed endeavour — globally as well as in India. The US-based coffee company and coffeehouse chain recently replaced its plastic straws and lids with biodegradable ones — a commitment it takes seriously as it looks for greener alternatives.
“Yes, there is no denying that such initiatives have costs attached to them but Starbucks doesn’t look at them as we are more focussed towards a better planet,” says Veetika Deoras, head — marketing, category and digital at Tata Starbucks. The company has paper bags, glassware and ceramic options for items consumed in-store as well as various initiatives to encourage its customers to go green as well. BYOT (bring your own tumbler) is one of them wherein customers get a discount if they walk-in at a Starbucks store with their own coffee mug.
Riding in India on its two-pronged growth strategy — expansion and innovation — the company is carrying forward its global lineage of 47 years of coffee innovation in the country as well. On getting global flavours like Nitro Cold Brew and local flavours like Alphonso Mango Frappuccino, Deoras feels that the Indian consumer has evolved over the years and is more aware about coffee. “The response we are getting on innovative beverages is heartwarming,” says Deoras. The company, a joint venture between the Tata Group and Starbucks with 119 stores in seven metros in India, believes that innovation is the key ingredient for it to differentiate in the market. India has not only seen the mushrooming of coffee chains but new independent high-end coffee shops like Blue Tokai are also expanding across the country.
The brand feels that Indians as well as the market have gone from the usual coffee or chai to experimenting with different brewing techniques and flavours. As per a report by Euromonitor International, India witnessed the growth of gourmet and fresh ground coffee with demand being driven by millennials in urban areas looking to experience different types of coffee flavours during 2016-17. “We are growing with Indian customers and their coffee exploration journey,” adds Deoras.
According to a RNCOS research report, Indian Coffee Chain Market Outlook 2022, the coffee chain market in India is currently on a continuous transformational phase. The consultancy anticipates that the sector will grow at a CAGR of around 18% during 2015-2022. The packaged coffee market is expected to grow between 10-15% CAGR over the next five years, as per Research and Markets.
Starbucks wants to expand where customers are and is still evaluating its next expansion steps. A number of cities, especially tier I, are on its radar. “We will be present wherever we have customers,” highlights Deoras.
The company invests heavily on digital. “It is high on engagement and helps us make decisions based on the feedback gathered,” says Deoras. She adds that the coffee and the experience one gets at its outlets help market the brand to customers. The country is an important market for the coffee chain which set shop in India in 2012. That said, Starbucks is not aloof from challenges here like high real estate prices, FSSAI guidelines, etc, but believes that it has what it takes to work around these.