Setting Up Shop in India

Starbucks Corporation recently announced that it will begin opening cafés in India and plans on opening its first café as early as August.  Starbucks’ arrival in India is a result of a joint venture with Indian company Tata Global Beverages, which is currently the country’s largest conglomerate.  Although India is traditionally a tea drinking country, consumer demand for coffee is increasing.  In fact, domestic coffee consumption has increased by an astonishing 80 percent in the last decade. 

China, like India, is traditionally a tea drinking country, yet currently is home to over 400 Starbucks cafés.  Starbucks hopes to have similar success in India, whose coffee market appears to be comparable to China’s.  Also, by the end of this calendar year, Starbucks aims to open 50 cafés in India, primarily in India’s two largest cities- Delhi and Mumbai. 

India’s increase in demand for Western products goes far beyond coffee.  Companies like McDonalds and Yum! Brands’ KFC and Taco Bell have recently been expanding in India due to growing international tastes of India’s youth and an increasing middle class that has more exposure to the Western world.

Starbucks has not said how much it will charge for its products in India, but other Western-style cafés historically have charged less in India than in developed markets.  However when compared to a basic local coffee outlet, Western-style cafés charge an average of 6-8 times more for a plain cup of coffee.  Many of these companies, despite significantly higher prices, have been successful and proven that success for Western-style cafés is attainable in India.