Starbuck's venture in India : A Brief Overview

1. A Case Study
STARBUCKS

2.  About Starbucks
JV in India
PEST Analysis
SWOT
Business Model
Strategy
People Connect
Roadmap and Challenges
Recommendations

3. STARBUCKS COFFEE
 American Global Coffee Company and Coffeehouse Chain
•Based in Seattle, Washington
•Founded in 1971
•CEO : Howard Schultz
Coffee
Smoothies
Tea
Frappucino
Pastries and Other Snacks

4. New Delhi
Gurgaon
Mumbai
Pune
Bengaluru
Chennai
Hyderabad
No. of Outlets
15
4
23
6
10
1
3
0
5
10
15
20
25
No. of Outlets=61
JOINT VENTURE WITH TATA
50/50 joint venture between Starbucks Coffee and Tata Global Beverages : MoU
Leveraging the global in-home expertise of Tata Global Beverages and the global out-of-home expertise of Starbucks
Share common values of responsible business ethics and a commitment to community
Quick Service Restaurant category

5. BUSINESS MODEL

6. STRATEGY : PEST ANALYSIS
•Starbucks entered in UPA reign.
•Cap on FDI in multi-brand retail increased to 100% in 2013.
•BJP has austerity towards FDI in retail, but alliance with Tata ensures security
•Forward approach towards labourers and employment welcomes Starbucks.
•India has a population of 1.71 billion
•a GDP growth rate of 5.6 % (approx) in 2014
•States with highest GDP are Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu and Gujarat
•% of India’s industrial growth is attributed to specific regions; mainly in Gujarat, Maharashtra, Haryana, Karnataka and Tamil Nadu.
POLITICAL
ECONOMIC

7. CONSUMER SPENDING
DISPOSABLE INCOME
ULTRA HIGH NET INCOME HOUEHOLDS

8. STRATEGY : PEST ANALYSIS
•Disposable income on the rise
•Western Culture sweeping in
•Market Penetration of coffee has increased from 59% in 2003 to 61% in recent times
•80% customers : 18-45 years
•High income band on the rise
•Cheap Labour and 550 m unemployed
•Eat Out culture among Youth: 21% market instant coffee
•80% of India’s coffee is exported.
•Agricultural technology needs attention.
•Coffee brewing technology of Tata is at par with Starbucks practices.
SOCIO-CULTURAL
TECHNOLOGY

9. OPERATIONS
COFFEE
•TATA Global Beverages (HQ: Coorg, Bangalore, 18 units in South India)
TEA
•India CHAI project (Assam, North East)
MILK (Only Pure Cow Milk)
•Two suppliers in North and West, and now have developed one in south as well.
SYRUP : US
OTHER FOOD ITEMS: Locally Sourced
1000 + Employees
•ETHICAL SOURCING
•STRINGENT QUALITY
SUPPLY CHAIN

10. Strengths
•High quality of products
•Premium HR practices contributes to employee morale
•Tata alliance (Partner and Supplier)
•Strategic relationships with suppliers
•Sustainable practices and advanced agronomy solutions
Weaknesses
•Tall management structure
•High pricing
•Coffee Dominant Business
•Limited Locations
•Rented Land
•Positioning
•Bargaining Power of Suppliers
Opportunities
•India is a huge market
•Customize Products
• Diversify
•Rise in economy and disposable income
•Target Population rise
•Increase in Coffee Culture
Threats
•Frequent changes in the market trends
•Better value offered by local cafes
•MoU with Tata
•Awareness
•Tea Culture
SWOT

11. price
Brand
Quality
Convenience
location
Variety
Reputation
Customization
Online user
low
High
Competitors Comparison

12. PEOPLE CONNECT
.
STORE AMBIENCE

13. PEOPLE CONNECT
ADAPTATION OF MENU
LOCALIZED MERCHANDISE
Chai Tea Latte
Panini
Murg Tikka
Konkani Twist Croissant
Chatpata Paratha Wrap
Chicken Reshmi Tikka Roll
Tamarind Peanut Chicken Calzone
Elaichi Mawa
A 'pour-over set' single brew serving merchandise, typical of the filter coffee culture down south
India themed mugs and tumblers

14. PEOPLE CONNECT
CHAI
Community Health and Advancement Initiative
A collaboration between the Starbucks Foundation, Tazo® Tea, Mercy Corps
Starbucks and tea have allies contributed US$2.6 million to these effort . Helped more than 12000 villages.
More than 60% of Indian tea comes from Northeast India ,where approximately 3 million people work on tea estates
Hygiene, Infrastructure, Vocational Trainings, Scholarships, Education, Women Empowerment
SWASTHA
A school for children with special needs (in partnership with the Coorg Foundation ) in Karnataka
CSR

15. Land
•Real estate acquisition is going to be very challenging, but again having Tata's help will be a big advantage for Starbucks
Supply Chain
•Developing the suppliers
Pricing
•Starbucks has been controlling its price, which is also affecting its profitability. Getting new sources might lower the cost
Expansion
•Starbucks can open stores in Tier II cities , educational institutes, with a subsidised brand. (e.g. Coffee Day Express)
Diversify
•Building up on the tea as it is a preferred drink for majority of Indians
RECOMMENDATIONS

17. •http://www.slideshare.net/ranganathpandit/tata-starbucks- ltd-a-strategic-analysis-15117792
•http://en.wikipedia.org/wiki/Tata_Starbucks
•http://www.authorstream.com/Presentation/anuj.jimj- 1317719-strategic-alliance-of-starbucks-and-tata-coffee/
• http://www.slideshare.net/ranganathpandit/tata-starbucks- ltd-a-strategic-analysis-15117792
• http://www.slideshare.net/arjunsingh023/tata-starbucks- india
• http://www.tradingeconomics.com/india/gdp-growth
• http://en.wikipedia.org/wiki/Demographics_of_India
•* http://zeenews.india.com/business/slideshow/the- business-of-coffee-chains-in-india_104.html/6
• http://blogs.reuters.com/india/2013/04/04/people-say-we- shouldve-priced-our-coffee-higher-tata-starbucks-ceo/
• http://www.magnolia2mumbai.com/a-tata-alliance- starbucks-foreign-direct-investment-in-india/
REFERENCES