Starbucks:

Brewing
Cofee in India
B U S I N E S S S T R
A T E G Y
S E C F
Prepared
By:
IMRAN
KHAN
HARSHA

BAN!"K
AR
HAR""N KA#R
RISHABH A
HI$"SH
M%$IR
AMANI
Table of Contents
CHAP$"R &: IN$R%!#C$I%N '
Starbucks: Brewing Cofee in India (
Starbucks: Cafeinating India (
Cofee: A Recession )ree Product *
Cofee Industry: In a Nut S+e,, *
P%R$"R-s )I." )%RC"S *
$+e $+reat o/ New "ntry *
$+reat o/ substitutes: 0
$+e Bargaining Power o/ Supp,iers 0
$+e Bargaining Power o/ Buyers 0
Co1petiti2e ri2a,ry 3
P"S$" 3
Po,itica, 3
"cono1ic 4
"co,ogica,: 4
Sociocu,tura, 4
5eat+er 4
P%R$"R-s !ia1ond &6
1) Demand condition for porters diamond &6
78 Re,ated and supporting industries: &&
Specia,ty cofee cu,ti2ation in India &&
M%NS%%N"! MAABAR AA &&
M9S%R" N#::"$S ";$RA B%! &&
Robusta Kaapi Roya,e &&
<8 )actor conditions in India: &7
and &7
abor : &7
'8 )ir1 Structure= Industry Structure and Ri2a,ry &<
CHAP$"R 7: BACK:R%#N! &'
Starbucks: $+e History &'
Industry structure and ri2a,ry: &*
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Ca/> cofee !ay &0
Internationa, e?posure o/ Ca/> cofee day &0
S5%$ Ana,ysis @ CC! &3
Strategies adopted by Ca/e Cofee !ay: &4
Barista a2aAAa &4
S5%$ ana,ysis o/ Barista 76
Strategies adopted by Barista: 7&
Costa Cofee 7&
:,oria BeanCs 77
Co1petitors- .isibi,ity 77
CSR initiati2es by Barista a2aAAa= Ca/> Cofee !ay= Costa Cofee: 74
Barista a2aAAa: 74
Ca/> Cofee !ay: 74
Costa Cofee: <6
CHAP$"R <: $+e S5%$-s <&
%pportunities and Roadb,ocks- A+ead <7
%pportunities: <7
Increasing Cofee Consu1ption <7
C+a,,enges: <<
Starbucks: S5%$ Ana,ysis <'
Strengt+s: <'
5eaknesses: <(
%pportunities: <(
$+reats: <*
Strategic Position @ Starbucks <*
Proposed Strategies <3
&D $+e Product <3
7D Pricing <4
<D Pro1otion <4
'D P,ace <4
Starbucks- current Strategy <4
&D Rapid store e?pansion strategy <4
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7D "1p,oyee $raining and Recognition '6
<D Rea, "state= Store !esign= P,anning= and Construction '6
'D Store a1bience '6
(D Cofee purc+asing strategy '6
Strategic Capabi,ities @ Resources and Co1petency '&
&8 Resources '&
78 Co1petences E $+eir co1petiti2e ad2antage '7
Conc,usion ''
$%5S Ana,ysis: '(
CHAP$"R ': Reactions and %ut,ooks '*
Co1pany Reaction o2er a period o/ ti1e '0
)uture %ut,ook o/ Starbucks in India '0
Re/erences: (7
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CHAPTER
1:
INTROUCTION
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Sta"b#$%s: B"e&'n( Co)ee 'n In*'a
Starbucks Corp. is aiming India as its next major hub for development. Starbucks ant to
replicate the success the! had in "S# and more recentl!$ in china. Surprisingl!$ their venture in
China proved to be more profitable than that of "S. %ere in India$ Starbucks entered into a deal
ith &#&# Coffee 'td
1
.$$ #sia largest publicl! traded coffee groer. &his is$ in particular$ a non(
binding agreement beteen to giants. &here are plans to combine the trust and legac! of &#&#
coffee ith the iconic brand image of Starbucks hich can move on to development of Starbucks
retail coffee chains in other parts of #sia. In addition to sourcing coffee beans from &#&#)s
Indian facilities$ the companies ill also ork toards developing Starbucks stores in retail
outlets and hotels.
Sta"b#$%s: Ca)e'nat'n( In*'a
India and China are the orld)s to fastest groing economies. Starbucks had alread! ventured
into the Chinese market and not surprisingl!$ their Chinese venture turned out to be much
profitable than that of their "S business. &hus$ the! ant to replicate their success in Chinese
mainland in India.
#lso$ the Indian market is heavil! driven b! the upcoming !outh culture hich is totall! driven
b! the estern trends. *ith the groing disposable income of Indians$ people tend to spend
more toards apparels and fast foods. *ith the success of Indian oned Caf+ Coffee Da! and
,arista Coffee$ it is a idel! proven fact that there is lot of scope for the development of coffee
caf+ culture in India. &hus$ Starbucks ant to capitali-e on this particular opportunit!.
&he! are planning to start ith targeting the niche upper class segment b! opening their outlets
in &aj %otels and .esorts. &heir primar! target market is the !ounger generation of age 1/(01
!ears. &he! ill also target the tourists ho ill be visiting India. Since$ most of the tourists
coming to India are from the countries of ".S.$ 2ngland$ 3erman!$ and 4apan ho are ell
aare of Starbucks brand name. &hus$ there ill not be the problem of brand name recognition
among them
&
$A$A Cofee is a part o/ $A$A Sons Cong,o1erate
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Co)ee: A Re$ess'on F"ee P"o*#$t
Co)ee In*#st",: In a N#t S-ell
PORTER.s FI/E FORCES
T-e T-"eat of Ne& Ent",
&he entr! barriers in the coffee retail industr! are relativel! lo in India$ particularl! for the
foreign pla!ers. &his is possible oing to the fact that 51 6 7DI
8
is alloed in India in retail
sector. #n! large or ell(funded compan! having the thorough understanding of the market can
enter into retail sector in India.
Economies of Scale: given the fact that Starbucks is a global$ it is having its on advantages
hen it comes to achieving the economies of scale. &hough$ for a start$ the! ill open fe stores
in India$ the! have plans to open ne stores in most of the major Indian cities.
Capital Requirement: Starbucks being the global coffee retail chain$ the! are going to have an!
particular capital related problems. #lso$ the! are having 9o" being signed ith &#&#)s for
opening their outlets in their &aj group of hotels and resorts. &hus$ their entr! can assured to be
prett! smooth
Access to supply:
India$ being the sixth largest producer of coffee in the orld is having the largest home gron
suppl! of coffee beans. &hus$ sourcing coffee for an! ne entrant in this industr! is not going to
be much of the problem
Customer or supplier loyalty:
Indian market is alread! being captured b! the long established brands like Caf+ coffee da!$
,arista$ ,arista 'ava--a and Costa Coffee. &hus$ it is going to be prett! much difficult for an! of
the ne entrant to establish its brand name in the Indian market. %oever$ Starbucks being the
international brand ill definitel! help in attracting the educated Indian crod
Market Experience:
&he existing pla!ers in the Indian coffee retail industr! have been here in the market from last 11
!ears. &hus$ their management must be having greater understanding of the Indian markets and
7
)!I stands /or )oreign !irect In2est1ent
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:allets. &herefore$ for Starbucks$ it is going to be important to first understand the Indian
preferences$ before making an! major move.
Legislation or government action:
In India 7DI regulation for single branded retail stores is 516. &hus$ an! foreign pla!er ill need
to have an Indian partner$ compulsoril!. &herefore$ Starbucks is also planning to enter in Indian
markets ith collaboration ith &#&# coffee.
Differentiation:
Coffee is not the product here there is a great scope for product differentiation. %oever$ it
depends on most of the cases on the store ambience$ hich can act as the point of differentiation.
T-"eat of s#bst't#tes:
Proucts for Prouct su!stitution
:roduct substitutes$ here$ ill include other beverages$ apart from the Starbucks coffee$ for
example$ soda$ fruit juices$ ater$ beer or other li;uid beverages. &his ill also include other fast
food beverages like burgers etc.
Su!stitution of a nee
&his ill include the loer end local coffee houses or other snack shops hich are less luxurious.
&hese are places hich provide people ith the place to sit$ chat and relax.
T-e Ba"(a'n'n( Po&e" of S#11l'e"s
In this case of coffee retail$ the suppliers$ suppl!ing the retailer ith the coffee beans are not
having much of the bargaining poer. &his is particularl! because of the fact that coffee retailers
like that of Starbucks tend to be ver! big bu!ers for an! of the supplier to lose as a hole. &his
also gives the Starbucks to dictate terms to the supplier.
Similarl!$ suppliers of other resources like that of paper products etc.$ ill not be having much of
the bargaining poer as there are man! sources from hich the compan! can source them.
%oever$ this is not valid in the case of the suppliers suppl!ing the technological machiner! as
there are not man! suppliers here.
T-e Ba"(a'n'n( Po&e" of B#,e"s
In the past$ bu!ers in India ere not having much of the bargaining poer as there ere not
man! food retail giants hich ere present in the countr!. %oever$ ith the advent of
multinational food retail giants in India$ like that of 9c Donalds$ ,arista 'ava--a$ Caf+ Coffee
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Da! and Costa Coffee$ consumer is faced ith lots of choices. &hus$ it ill be difficult for
Starbucks to influence the Indian bu!ers to pa! premium for their products.
Co31et't'4e "'4al",
9ajor competition for Starbucks in India comes from that of Caf+ coffee da!. &he abbreviation
CCD is knon to most of the people in urban parts of India. &heir positioning is same as hat
Starbucks have in "S. &he other competitors include ,arista 'ava--a$ ,arista and Costa Coffee$
hich are also the multinational brands$ idel! recogni-ed.
#part from them$ secondar! competitors include the 3eorgia Coffee served in fast food joints
like that of 9c Donalds and <7C
PESTE5
3
Pol't'$al
1 &he 3overnment of India has communicated the sanction for the implementation
of the Coffee Debt .elief :ackage = 8111 for the debt ridden small coffee groers ith a
total
implication of .s. 801.>> crores vide order ?o 0@>@811A(:lant B,) dated 10th 4une$ 8111.
&he cop! of the order made available to the S',Cs$ ,anks$ and 3roers) #ssociations
for information and initiate necessar! action for speed! implementation of the :ackage.
2 It is estimated that this relief package ould benefit more than C56 of the small
groers BD0C8C small groers out of the total of DA$//5 coffee groers) having
accumulated bank
loans covering all the coffee groing regions of the countr!.
3 Implementation modalities(EI :lan Support Schemes(including 9echani-ation
1. 9odalities for implementation of coffee development programs = ?2.
2. 9odalities for implementation of coffee development programs = ?&#
3. Support for 3roer Collectives in Coffee Sector = 9odalities
4. Support for coffee replantation$ ater augmentation F ;ualit! up gradation for coffee in
<arnataka$ &? F <erala
<
Source: +ttp:FFwwwDindiacofeeDorgFindiacofeeDp+pG
pageHModa,itiesI1p,e1entation!e2e,op1ent
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5. 9odalities for implementation of scheme for setting up of Gualit! 2valuation@Cup
&asting 'ab
6. 9odalities for implementation of subsid! schemes for Coffee :rocessing
7. 9odalities for Implementation of Development Support Scheme
E$ono3'$
In ;ue ith 3lobal price increase in coffee$ Indian coffee manufacturers are also getting hit b!
the price increase. Coffee manufacturers have to compromise on their margins since their input
costs are raising. Coffee groers on the other hand are sorting to practices like %oarding ith the
hope of further price increase in global markets so that the! can cash in on exports. &his is again
creating suppl! side pressures and further escalating the prices.
E$olo('$al:
# major factor affecting coffee prices is eather. *eather is an uncontrollable force that can
seriousl! damage the crop !ield in an! given !ear. So$ if eather does not cooperate$ farmers are
not able to produce as much as demanded and once again$ there is a suppl!@demand imbalance
that leads to rising prices.
So$'o$#lt#"al
Coffee stores hangout places$ a place for !oung people$ average age of Indians around >1$
therefore a big scope for this industr! to blossom in India.
7eat-e"
# major factor affecting coffee prices is eather. *eather is an uncontrollable force that can
seriousl! damage the crop !ield in an! given !ear. So$ if eather does not cooperate$ farmers are
not able to produce as much as demanded and once again$ there is a suppl!@demand imbalance
that leads to rising prices. In 8110$ demand for coffee significantl! overcame the available
suppl! of coffee partiall! due to the fact that ,ra-ilian coffee fields had experienced extremel!
poor eather and could not produce enough coffee to meet orldide demand. Since ,ra-il
accounts for 8C6 of coffee production$ a decrease in production in ,ra-il leads to a significant
lack of suppl!.
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PORTER.s 'a3on*
"# Deman conition for porters iamon
.estaurant chain Cafe Coffee Da! said it plans to almost double the number of outlets it operates
in India b! the end of 8110 as it embarks on an expansion spree.
# division of the #malgamated ,ean Coffee &rading Compan! 'td B#,C&C')$ Cafe Coffee
Da! currentl! operates 1$1A5 outlets across India across three formats (( lounges$ cafes and
kiosks. It is looking to add about A15 ne outlets in the next three(and(a(half !ears.
H&he compan! has a plan to aggressivel! expand the number of outlets it operates to 8$111 cafes
b! the end of 8110$H Cafe Coffee Da! president Bmarketing) < .amakrishnan said.&his tells us
that demand for Specialt! coffee is rising ever! !ear.
#lso$ &ea consumption in India has declined ever since the subcontinentIs population discovered
the lure of the bean and the roast. #s demand rises$ traditional suppliers in ,ra-il and Columbia
ill struggle to match it ( and the price to the coffee shops ill rise and rise.
Supply an Deman $unamentals
0
Coffee prices are largel! determined b! suppl!@demand fundamentals$ and to a slight degree$
speculative actions. So$ coffee prices generall! increase hen demand exceeds suppl! and the!
generall! decrease hen suppl! exceeds demand. 7or example$ if the orld(ide coffee crop
!ield decreased for an! given !ear to an amount less than the demand from orld(ide coffee
retailers then coffee prices ould likel! to increase as the availabilit! of coffee ould be less and
people ould be illing to pa! a higher price if there as a strong lush enough demand for
coffee.
'
Source: +ttp:FFwwwDnA+era,dDcoDnAF/oodFnewsFartic,eDc/1GcIidH76*JobKectidH&60'0*7(
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2: Relate* an* s#11o"t'n( 'n*#st"'es:
Coffee cultivation and manufacturing in India
S1e$'alt, $o)ee $#lt'4at'on 'n In*'a
.
;ONSOONE ;A5ABAR AA
9onsooned coffee or coffee beans )sollen) ith moisture from the air$ is prepared at the curing
orks situated on the *est Coast of Southern India. Stored in special arehouses$ moist
monsoon inds circulate around the coffee beans$ making them sell in si-e and take on a
melloed but aggressive$ must! flavour. &his process !ellos the bean and reduces the acidit!$
imparting a heav!$ s!rup! flatness reminiscent of aged coffees.
7or preparing monsooned coffees onl! dr! processed #rabica and .obusta beans are used. &he
coffees are mainl! used in blends to mello and impart richness to rougher$ acidier coffees. &he
best grade in monsooned coffee is 9onsooned 9alabar ##.
;YSORE NUGGETS E<TRA BO5
these onderful and exotic coffees are prepared from ashed #rabicas gron in the regions of
Chikmagalur$ Coorg$ ,iligiris$ ,ababudangiris and Shevaro!s. &he beans are ver! large$ uniform
bluish(green in color$ ith a clean polished appearance. In the cup$ the coffee exhibits full
aroma$ medium to good bod!$ good acidit! and fine flavor$ ith a hint of spice. &his is a rare$
premium coffee and trul! represents the best ;ualit! coffee from India.
Rob#sta =aa1' Ro,ale
&his coffee is prepared from .obusta :archment #, from the regions of Coorg$ *a!anad$
Chikmagalur and &ravancore. &he beans are bold$ round ith pointed ends$ and gre! to bluish(
gre! in color. &he cup ensures full bod!$ soft$ smooth and mello flavor
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Specialty coffee manufacturing in %nia
&here are not man! <e! Indian pla!ers operating in Specialt! coffee manufacturing. &ata Coffee
is coffee compan! oned b! the &ata 3roup. &he compan! ons 1C coffee estates in Southern
India. &he estates are spread across the districts of Coorg$ Chickmaglur and %assan in <arnataka
and Jalparai district in &amil ?adu. &ata Coffee is the largest integrated coffee plantation
compan! in the orld.
3: Fa$to" $on*'t'ons 'n In*'a:
5an*
'and is not a major concern$ hat matters is location for coffee stores. Stores are often opened
up in the vicinit! of croded places. #vailabilit! of space for opening up retail coffee stores in
real estate)s establishment like openings in %otels$ shopping malls$ corporates etc. is not a
problem here. %oever$ proper land is also available in India if Starbucks ants to open
independent stores.
5abo":
Availa!ility of c&eap la!or: Cheap labor$ like all other industries$ is the main stake of Indian
Coffee Industr!. #vailabilit! of cheap labor in most of the coffee groing region and ;ualified
labor for orking in coffee cafes is a something promising for the coffee retailing in India.
'nerstaning of Englis& language: 9uch of the labor pool available in India is ell versed
ith 2nglish language. &his is particularl! beneficial for the multinational coffee retail chains
like that of Starbucks. &his also helps in promoting the brand among the tourists from estern
parts of the orld$ ho are ver! ell aare of ,rand ?ame Starbucks
Capital: Coffee stores not a capital intensive industr!. Capital re;uired is not huge but on
medium level. 9ajorit! of the expenditure is made in purchasing a strategic location and
building a ;ualit! store that provides a good ambience and experience to the customers.
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!: F'"3 St"#$t#"e> In*#st", St"#$t#"e an* R'4al",
7irm structure of Starbucks can help them a lot as their original management s!stem is
closel! in s!nchroni-ation ith Indian philosoph! of management. &hus$ Starbucks can
add this factor in their favor hen the! ill be launching their full scale operations in
India.
In indian coffee retail industr!$ there are ver! fe pla!ers hich are driving the market .
hoever$ there is a increasing competition among them $hich is increasing !ear after
!ear.
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CHAPTER 2:
BAC=GROUN
Sta"b#$%s: T-e H'sto",
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Starbucks$ as e see toda! as not there from the ver! beginning. Starbucks has the ver! humble
start hen three coffee fanatics$ 3erald ,aldin$ 3ordon boker $ and Kiev siegl$ ( opened a
small coffee shop in SeattleIs pike place market. &he shop speciali-ed in selling the #rabica
beans to the niche market of coffee purists. It as onl! in 1CA8$ that %oard Schult-
5
$ joined the
compan!)s marketing division. #fter joining the compan!$ he travelled to Ital!$ here he as
fascinated b! the Ital!Is coffee culture. %e as highl! impressed b! the a! that the local coffee
bars influenced the lives of native Italians. #fter returning back from Ital!$ he convinced the
compan! to set up the espresso bars in the corner of its donton Seattle shop.
'ater$ Schult- said that the espresso bar of that time became the protot!pe of his long term
vision. #ccording to him$ there ere onl! to places at that time$ here #mericans mostl! spend
their time. %ome and orkplace. %e thought of giving them another place here the! could go
and relax. &hough. *hen he proposed his plans of expansion$ he as met ith a great resistance.
# fe !ears later$ Schult- got the chance to ac;uire Starbucks hen the founders agree to sell
him their share in Starbucks. #s soon as he took over$ he started opening ne stores all over
"S#. &he stores sold hole beans and premium priced coffee beverages and their target market
as the !oung hite collar #mericans ho are educated and have high disposable incomes.
%e as later$ in 1CC8$ joined b! Lrin Smith$ ho is the present da! C2L of Starbucks. ,! 8118$
Starbucks has been established as the dominant specialt! coffee brand in ?orth #merica. Sales of
Starbucks had climbed b! the C#3.8 of 016 and net earnings had earned b! the C#3.
/
of
516. #s of 8111$ Starbucks have more than 15111 stores in more than 51 countries
5 Howard Sc+u,tA is now t+e president o/ Starbucks
6 CA:R stands /or Co1pounded Annua, :rowt+ Rate
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In*#st", st"#$t#"e an* "'4al",:
In India( t&e specialt! coffee industr! has the potential for high barriers to entr! but lacks them
due to the industries immature state and the presence of no established firms. #n ideal strateg!
ould involve a firm establishing themselves in a rapid manner through an aggressive groth
strateg!.
#s defined b! 9ichael :orter there are three potentiall! successful generic strategies:
Lverall cost leadership$
Differentiation and
7ocus
7or Starbucks India seems to fit into the generic strateg! of focus ith an emphasis on
differentiation ithin the particular target consumer segment$ since the! ould be opening up
their stores in &aj group of %otels$ one of the premium hotels in India. # focused strateg! should
target market segments that are less vulnerable to substitutes or here a competition is eakest
to earn above(average return on investment. Starbucks India can also but combines this broad
scope ith a differentiation strateg! based on design$ branding and user experience that enables
it to charge a price premium due to the perceived unavailabilit! of close substitutes.
%oever the industr! structure in India for retail coffee stores is bit different. Caf+ coffee da!
and ,arista have their stores open in the public areas here the masses as ell as the elites have
the access. So in terms of accessibilit! of the stores the current Indian industr! structure differs
from that of Starbucks.
Since .etail coffee stores are mushrooming at ever! other place because of the high industr!
groth rate and demand condition e expect a greater extent of competitive rivalr! in the
respective markets
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Caf? $o)ee a,
Caf+ coffee da! is India)s largest coffee retail chain. #t first$ India)s largest coffee conglomerate$
amalgamated bean coffee trading compan! ltd started the concept of coffee bars in India ith
first store in 1CC/ on brigade road in ,angalore. *ith #siaIs second(largest netork of coffee
estates B11$511 acres) and 11$111 small groers$ Coffee Da! has a rich and abundant source of
coffee. It has netork strength of more than thousand coffee stores across 181 cities in India.
9ajor chunk of CCD customers falls ithin the age group of 81 to >1 hich accounts for 5D6 of
the overall percentage. &he group comprises of mainl! college going students and !oung
orking professionals
# lot can happen over coffeeH became a popular line among !oungsters. In a bid to take their
coffee chain national in 8111$ the management decided to strengthen their brand pull ith an
appealing tag line. 7actors like ambience$ food$ music$ and atmosphere and meeting people ere
identified as the aspects that ere draing people to their Cafes. 2ncompassing all these factors
in a single line$ the sentence H# lot can happen over Coffee$ as phrased.
Inte"nat'onal e@1os#"e of Caf? $o)ee *a,
Caf+ coffee da!$ in 4une 8111$ ac;uired Caf+ 2mporio( # caf+ chain from C-ech .epublic. Cafe
2mporio has 11 cafes in C-ech .epublic( D of them in :rague and 1 each in ,rno and Llomouc
and 8 at 7reeport(%ate. Caf+ 2mporio runs on 8 formats similar to CCD)s regular caf+s and
'ounge F S;uare set ups. &he regular cafes are pure pla! caf+s serving hot and cold beverages
and read! to eat snacks hile the lounges and s;uares come ith a broader menu and elegant
la!outs.
CCD has on the best ,.2*9#S&2.S in the countr!. It is also having fairl! impressive track
record at the I,C BIndia ,arista Championship) F *,C B*orld ,arista Championship) is as
follos:
811>: &op 5 ranks at I,C F stood 5th at *,C at ,oston$ "S#.
8110: &op / positions at I,C F resulted at *,C at &rieste$ Ital!.
8115 : &op / positions at I,C F resulted at *,C at Seattle$ "S#
811/: Second and third place at I,C
811A: &op three positions at I,C and represented India at *,C at Copenhagen
12 | P a g e
811C: CCD secured the first$ third$ fourth and M9ost :romising &alent) position at the
I,C and represented India at *,C at
#tlanta
8111: 7irst$ second and fourth place at the I,C and represented India at the *,C in
'ondon
S7OT Anal,s's A CC
Strengt&s:
'arge ?umber of outlet.
In house sourcing of coffee beans.
&ie "ps ith good companies.
"S: of brand is its considered a highl! affordable brand.
)eaknesses:
9an! of the CCD stores are incurring loses due to rong site selection.
Improper sitting arrangement
*pportunity
Coffee cafe industr! is one of the fastest groing industr! in #sia.
'arge untapped 9arket
&ie(ups ith other companied for promotion.
9ore people like to visit CCD for informal meetings.
+&reat:
2ntr! of foreign pla!ers like 3eorgia$ Star!ucks etc.
Lther hukka parlors like Sheeshas $ :eshaar $ <o!las
D
$ " &urn are also gaining lot of
attention and preferred b! !oung generation to hang around hich in turn is attracting the
market captivated b! CCD
0
Hukka= S+ees+a and Koy,a are $raditiona, Indian additi2es
16 | P a g e
St"ate('es a*o1te* b, Cafe Co)ee a,:
1) Cafe Coffee Da! offered an informal ambience ith bright and e!e(catching interiors.
Jisitors could sip coffee$ brose the internet$ conduct business meetings or just spend
time ith friends.
2) &he baseline ,A lot can &appen over coffee-( positions it close to ever! one)s heart.
3) Cafe Coffee Da!)s also targeted other locations like corporate houses$ airport$ hospitals
and shopping malls. Cafe Coffee Da! priced its products 816 loer than its competitors.
4) Cafe Coffee Da! positioned itself as a mass market brandN mini(metros ere also added
to its list. It targeted the middle class$ upper middle class$ house ives and students. &he
prices are less compared to the other to. &his segment has high potential and great
bu!ing poer and has great market share.
Ba"'sta 5a4aBBa
,arista 'ava--a is a chain of espresso bars in India. &he! are head;uartered in ?LID#$ having
outlets in Sri 'anka$ ,angladesh and 9iddle 2ast. It as founded first in 1CCD b! #mit 4udge
and as part of his group companies. %is first e;uit! deal as ith &#&# coffee. #fter the deal
ith &#&# coffee fell$ apart$ Sterling Sivasankaran$ bought over the firm. In 811D$ Sterling
divested their entire stake to 'ava--a. ,arista 'ava--a is currentl! oned b! 'ava--a$ Ital!)s
largest coffee compan!. Coffee is supplied b! the Indian roaster 7resh and %onest$ head;uartered
in Chennai. &he latter is also oned b! 'ava--a. #s of 811C$ the chain has 811 stores in India$
ith estimated annual revenue of .s 811 crores. ,arista as the fastest brand to make it to the
list of super brands and is ranked among the top 51 phenomenon that changed India
&he first ,arista 'ava--a as opened at ,asant 'ok$ ?e Delhi in 7eb 8111. 'ava--a
traces its origin back to 1AC5.
'ava--a is the sixt& largest coffee roaster in the orld. Lperating in over A1 countries$ it
has a 0/.56 share in the Italian retail market
,arista 'ava--aIs pioneering efforts at providing trul! Italian coffee house experience has been
met ith tremendous appreciation.
9ost #dmired .etail 'eisure Chain 8111(#ards for shoppers and consumer insights
18 | P a g e
&imes 7ood 3uide 811A(,est Coffee ,ar #ard
I9#32S .etail #ard 811D(I9ost admired retailer of the !ear: Catering LutletsI
Super ,rand 811/(811D
%& 7ood 3uide 8111(,est place to have coffee
&L:S aard for Specialt! Coffee 2xcellence b! the Specialt! Coffee #ssociation of
#mericaBSC##)
&imes 3roup and ,usiness Standard recogni-es ,arista 'ava--a as the I,rand of the !earI
in 8118
S7OT anal,s's of Ba"'sta
Strengt&s:
Claim to sell the best coffee.
Strong ,rand image.
2xcellent %uman resource.
'arge ?umber of outlet
In house sourcing of coffee beans
2spresso(%ighest selling coffee
)eaknesses:
:erceived as an expensive brand.
Self Service for the customers.
*pportunity
Strong brand recall.
&ie(ups ith other companies for promotion.
+&reat:
Coffee Substitute.
.ise in the cost of coffee and dair! products.
Competition from national and international pla!ers.
29 | P a g e
St"ate('es a*o1te* b, Ba"'sta:
1) ,arista positioned itself as a lifest!le brand ith Italian neighborhood.
2) #lliance ith &ata coffee ould suppl! food items like baguettes$ croissants$ cookies$
sandiches$ pastries and desserts.
3) 2ver! month$ it introduced and focused on a particular t!pe of coffee. &he idea as to
change customer)s occasional indulgence and make it a habit and educate them about the
original coffees. It also developed store(in(store concept b! focusing on themes that
compliment coffee$ such as music$ books and art.
4) ,arista entered into marketing tie(ups ith planet 9$ crossord and 2bon! to set up it
2spresso)s at the corner. &he compan! also entered branded merchandising ith caps$
coasters$ co)s and cups.
5) ,arista entered home bre segment ith freshl! grounded coffee. &he compan! extended
its product portfolio from roasted coffee range to single origin coffee.
6) ,arista)s adopted a strateg! on hich it segmented itself to the elite class. &his class has
high potential because these people associate ith an!thing that is of status s!mbol$ the!
spend ver! high. So ,arista choose this segment contains people ith big designations
like 9D)s$ Doctors$ C2L)s and people belonging to elite class. &he! like to be in a place
hich is class! and luxurious like ,arista.
Costa Co)ee
Costa coffee is a "<(based coffee retailer$ hich entered India in 8115 through the 4aipuria
3roup as its master franchisee. It has alread! dran up an aggressive expansion blueprint$ under
hich it plans a four(fold increase in the number of stores in the next three !ears. &he current
number is D5.
21 | P a g e
Costa Coffee$ like other ambitious coffee corporations$ expanded its alread! far(reaching coffee
empire throughout India in 8115. ,ut despite an! successes displa!ed in the hard numbers$
CostaIs higher management is declaring that the! can do better. &he corporation directl! planted
their original "< model onto the Indian subcontinent. In revie of the 5 !ears of operations in
India$ Costa discovered the coffeehouses ere first and foremost meeting places. #s a result$ the
entire Costa Coffee model had to be reorked. &he brand needs to refocus their efforts in the
south$ here coffee is a popular drink.
Glo"'a CeanDs
3loria 4eanIs currentl! has 1/ outlets in 9umbai and Delhi. It is looking to increase that number
to 85 b! !earIs end across other metros$ and then jump eightfold to 811 b! 8110.
Compan! is also teaking its sourcing strateg! for the Indian market. 7or the first time$ 3loria
4eanIs is sourcing and roasting coffee beans outside of S!dne!N in this case$ in India itself. &hatIs
because coffee attracts a 1186 import dut! in India and in a price sensitive market like this$
passing on the extra costs to the consumers ould be suicidal for an! pla!er.
Co31et'to"s. /'s'b'l't,
.o/ of *utlets
CCD
CCD crossed over 1111 cafes throughout the nation b! 8111. &he! have a minimum of 1151
outlets. &he number increases almost ever! eek. # Mmeter) on their official ebsite
BCafecoffeeda!.com) keeps continuous track of the number.
0arista
,arista has around 8A/ outlets across India$ including 1D in the overseas market.
22 | P a g e
Comparison:
2ven though the numbers of outlets are more for CCD$ but that is more due to them opening up
stores in ever! nook and corner. In some places like Connaught :lace in ?e Delhi$ there are
almost three CCD outlets$ on the same road. ,ut ,arista has stores that are generall! huge and
are almost ala!s have to floors. So$ that is h! judgments should not be based onl! on the
number of outlets.
+ie1ups
CCD
2imalaya 3it& CCD:
&o drive usage of hone!$ %imala!a Drugs is developing dail! diet products and looking at
marketing them b! t!ing(up ith leading consumer brands. %t &as tie up 3it& Caf4 Coffee
Day( to create four is&es5 2oney Cappuccino( 2oney milk s&ake( Ric& C&ocolate Cake
an ice cream toppe 3it& &oney an nuts/ &he Cafe Coffee Da! partnership is uni;ue. It
provided a platform to reach out to the target audience in a relaxed environment here the!
could experience innovative uses of hone!. &he association ith Cafe Coffee Da! across 111
outlets in seven cities as not onl! to expand the categor!$ but also toards creating touch points
to experience the goodness of %imala!a 7orest %one!.
Levi6s:
CCD &as also tie1up 3it& Levis 3&ere CCD 3ill promote Levis prouct in t&eir cafes/
'evi)s recentl! launched their latest range of apparel$ 'evi)s 511$ through CCD as part of their
annual laterals like *all visuals$ &ent cards$ :osters and Door stickers. &here is also a special
'evi)s Drink.
Movie launc&es:
#part from product launches$ the compan! also does a number of tie(ups ith the movie Industr!
in the same manner.
23 | P a g e
0AR%S+A
0arista 3it& +a7 8roup:
,arista Coffee$ a leading coffee bar chain$ has tied up ith &aj group of %otels for setting up
exclusive ,arista espresso bars at the &aj hotels in metro cities. &he first such bar ould be at the
2mperor 'ounge at the &aj 9ahal hotel in ?e Delhi folloed b! a ,arista ,ar at the Sea
'ounge at the &aj 9ahal %otel in 9umbai. &his ould be folloed b! similar bars at &aj 9ahal
hotels in Calcutta$ Chennai and ,angalore. ,arista also ill be housed at the coffee shops of all
major &aj %otels in the countr!.
0arista 3it& +ata +ele services:
,arista has also tied up ith &ata &ele service. &his tie(up as primaril! done in order to provide
consumersI access to the Internet. &he objective being$ toda! if !ou look at ,arista consumers$ a
fair number of them come to ,arista to discuss business over a cup of coffee. 9oreover$ it is
easier for them to meet at ,arista$ discuss business and send the information across. It is going to
be focused primaril! on ork$ toards the bus! executive ho is traveling and has dropped b!
for coffee or the small office segment ho might just ant to ork out of ,arista.
Lacoste 3it& 0arista:
'acoste India has decided to tie(up ith coffee outlet chain ,arista in all the major metros and
some mini(metros. &he strateg! is to target !ounger audiences$ hich have a penchant for the
Hfiner things in lifeH. &he customer segment of ,arista is ver! different from the ones ho visit a
regular coffee shop.
Elle1"9:
,arista is jointl! tied up ith 2lle 1A to promote their product. 2lle(1A is launching a collection
of coffee colored lipsticks and has named it after ,arista)s beveragesO &herefore$ the! are
orking ith 2lle 1A$ hich is a !outhful brand. 9oreover$ the! both ill gro ith this
association. 7or 2lle 1A$ the objective is to build a platform for their range of coffee colored
lipsticks and for them$ the objective is to associate ith the brand and have their consumers
coming in to ,arista.
2! | P a g e
AM0%E.CE
CCD
P7irst Impression is the 'ast Impression . &his is true$ particularl!$ in this business. &he first
thing that the customers come across is the surrounding and the ambience of the store. &o further
brighten the vibrant atmosphere of the caf+s$ there has been a greater thrust on providing more
value added services such as video juke boxes$ co-! sofa seating$ and exciting round the !ear
promotions. Caf+ interiors at the compan!Is 0>1 outlets are being given a hole$ ne look. In a
change from the largel! ood and granite based interiors$ there is more of steel and lots more
color. &he !oung colors of toda!$ lime green$ !ello$ orange$ and purple ill predominate. &he
crocker! ill also sport these colors. &he larger cafes ill also have lounge areas and a fe
beanbags.
$ig: $ile p&oto of am!ience in caf4 coffee ay
2+ | P a g e
0AR%S+A
&he color shades that the! have used are terracottaN it is arm ( it is orange. &he background has
a dark Lrange color. Lrange color signifies of a st!le and friendl! ambience of its on. In order
to match the color combination of the surrounding even the uniform of emplo!ees are orange in
color. &he place invites the customers to spend time. %oever$ the focus ould$ continue to be to
recreate the ambience of the t!pical Italian neighborhood espresso bars in India$ so$ as to provide
a comfortable place for people to relax and experience Pthe jo! of coffee . &he ambience of the
location and the ;ualit! of coffee ould$ continue to be the ke! factors hile groing the chain.
It has lots of board games for an!one to indulge in$ like chess$ ord scramblers$ and a guitar to
pluck some chords.
0usiness Moel $ollo3e 0y
CCD: the! follo franchisee 9odel for their business
,arista: Compan! Lned Lutlets.
Merc&anising
CCD
7unk! Caps Q .s /1 onards
Cool &(Shirts Q .s 1D5 onards
,ags Q .s 1/1 onards
9ugs Q .s /1 onards
Coffee 7ilters Q .s C5 onards
.eglon Sleeves &(Shirts Q .s 80C
9ar;uis pens Q .s >15 Lnards.
Shoulder ,ags Q .s 81C
Coffee 9ints Q .s 01
20 | P a g e
0AR%S+A
Coffee 9ugs in Lrange and ,lue hich cost .s 55 and .s CC
&(Shirts hich cost .s 151
,arista has also started a ne concept of ,arista merchandise. ,arista 9erchandise is available
onl! at selected ,arista espresso bars in Delhi$ 9umbai$ <olkata$ Chennai$ %!derabad and
,angalore. In ,arista 9erchandise customer can take home different t!pes of beans and have
coffee of his on taste. Some of the ,arista 9erchandise is as follos:
1. 7rench :ress
2. ,arista %ouse blend
Lne of the most interesting things to keep in mind ith regards to all the coffee chains is the
manner in hich the! have blended into the Indian culture. It)s not that these ere foreign
franchises$ but the ver! fact that spending .s. 51@( for a cup of coffee as not a routine thing for
the Indian consumers.
So$ these chains had to make sure that the! ere able to attract the consumers b! making
themselves a part of the Indian culture. Lne thing in this regard that the! have done is that the!
have shaped their menus to be flexible enough so that the! can adjust to changing situations such
as eather.
7or this ver! fact$ the Indian consumers ere in for a pleasant surprise hen the! found out that
the! can have local delicacies like Aam Panna, Mango Shake in these coffee chains as ell. Its
?ot that the taste ould be the same like the older da!s$ but still it as close it could get to the
original taste.
22 | P a g e
&he biggest beneficiaries for this ere the orking mothers and the students ho ere aa!
from home for studies or ork. &he mothers) ho are orking and do not get the time to make
things like these hich are relished b! their children. So$ the! can an! time alk into a coffee
chain in the seltering heat ith their children and enjo! these drinks.
#lso$ for the children aa! from home$ it acts as a close substitute for the drinks back at home.
#lthough the prices ma! be a little high$ but the ver! fact that !ou can have these drinks at !our
beck and call$ does not pinch the consumers a great deal and in turn puts the coffee outlets in
good stead.
#nother thing that the! have done is that$ instead of focusing onl! on the estern foods$ the!
have given e;ual importance to local foods such as Samosa, Kulchas, etc. So$ it is not that !ou
ill onl! get to eat burgers$ sandiches$ but instead one can have their favorite coffee ith a
local delicac!. &hat surel! is a lip smacking prospect for the Indian Consumer.
,ut there is one glaring mistake the! are reportedl! committing till no. ?one of the coffee
giants has tried and ventured into the segment like the one adopted b! the Suba!. ?one of them
offer a facilit! herein customers can be a part of the actual production of their coffee.
Suba! gives the consumers the convenience to choose their on breads$ sauces and even the
toppings. &his makes them feel related to them as it gives a sense of pride to be able to hip up
!our on favorite goodie. &hat is one aspect here Starbucks can focus$ b! opening self help
kiosks in places such as metro stations$ malls$ etc.
26 | P a g e
:eople can punch in their order and make their on coffee using the ingredients of Starbucks.
&his ill make the consumers feel a sense of importance and gain a sense of belonging toards
Starbucks.
CSR 'n't'at'4es b, Ba"'sta 5a4aBBa> Caf? Co)ee a,> Costa
Co)ee:
CS. or Corporate Social .esponsibilit! has ala!s been a topic here there is never a
commonl! reached consensus. ,ut ith increased guidelines about allotting a certain percentage
of profits aside for giving back to the societ!$ CS. has assumed greater importance in the cash
purses of major corporates.
So$ the three coffee stalarts$ vi-. ,arista 'ava--a$ Caf+ Coffee Da!$ and Costa Coffee$ also did
not lag far behind.
Ba"'sta 5a4aBBa:
&aking its I"se 9obile$ Save :aperI campaign further$ Idea Cellular
A
has partnered ith the to
coffee chains to make it possible to eliminate the use of paper in transactions. &hrough a uni;ue
mobile softare application$ hich has been made available at CCD and ,arista outlets$ people
can donload the menu card and bill on their mobile phones$ thereb! eliminating the need to use
paper for these purposes.
Customers$ ho come to these outlets$ ill be informed about this initiative. &he! ill be given
the option of donloading the application onto their mobile phone$ through a ,luetooth transfer.
&he home screen of the application ill have three options: Lrder$ hich enables the customer to
brose the menu$ select the items to be ordered and see the order summar!N ,ill$ here the
customer can vie the total bill for the items orderedN and #bout "s$ hich carries information
on the campaign.
Caf? Co)ee a,:
&heir biggest CS. initiative
C
is the SJ3% Jocational &raining College hich as established in
#pril 8115 in Chikmaglur$ <arnataka. It has the aim of bridging the gap beteen the urban and
the rural !outh b! giving opportunities for the economicall! underprivileged ones for learning$
training and ensuring them due placements. It has the vision to create an environment here
8 Source: +ttp:FFwwwDa/aLsDco1FnewsFstoryD+t1,GsidH7*743
9 Source: +ttp:FFcsrEupdatesDposterousDco1FaE,otEcanE+appenEo2erEcofeeEcsrEatEccdEcorpo
28 | P a g e
students are motivated to find their purpose and reali-e their full potential. &he college trains and
supports rural !outh to be independent$ responsible and adaptable. It provides them an
opportunit! for personal and professional development thereb! e;uipping them ith skills to
handle the rapidl! changing environment. &he college has trained 11A1 students$ man! of hom
have found emplo!ment at CCD outlets across the countr!. Courses offered include Certificate
Course in %ospitalit! 9anagement F 9icro 7inance. &he &rust bears the entire expenses of the
course hich includes imparting education$ providing food and accommodation$ uniforms and
transport facilities. &he trained students are guaranteed emplo!ment. Current emplo!ees are
involved activel! in SJ3% programs and help b! conducting modules etc.
Costa Co)ee:
2ven this coffee giant is not lagging behind the CS. standards. It has given emplo!ment
opportunities to man! hearing impaired emplo!ees as its latest initiative
11
. So next time !ou visit
a Cafe Coffee Da! or Costa Coffee outlet$ !ou might be elcomed b! a silent bre master
carr!ing a note: PI)m hearing impaired. :lease jot don !our order.
If corporate social responsibilit! BCS.) beckons hotels and restaurants across the countr!$ the!
are all ears. &o do their bit for the societ!$ the! are recruiting ph!sicall! challenged people for
various operations.
Costa Coffee plans to open eight to nine stores hich ill be run entirel! b! handicap emplo!ees
in the next one !ear. P*e have tied up ith an ?3L called 2nable India and ant to hire about
111 such emplo!ees per !ear$ sa!s Cafe Coffee Da!)s %. head$ Sh!amala Deshpande.
So$ e see that all these companies have alread! initiating the process of CS. in India. &he!
have alread! taken it to a ne level and it ill be up to Starbucks to see as to ho it ill react to
all these initiatives. ?ot much can be expected in the nascent stages as the! ill still be finding
their feet in the Indian market initiall!.
,ut$ as time progresses$ the Indian market might ant to see CS. initiatives taken from
Starbucks as ell.
&6
Source:+ttp:FFwwwDkar1ayogDorgFnewspaperartic,esFnewspaperartic,esI&&700D+t1
39 | P a g e
CHAPTER 3: T-e
S7OT.s
31 | P a g e
O11o"t#n't'es an* Roa*blo$%s. A-ea*
O11o"t#n't'es:
Coffee stores are becoming ;uite popular in India. &hese stores have become a hotspot for the
;uite popular among !ouths in India as hangout places. 9ore than 1$511 cafes have sprung up
across India in the past decade$ mostl! from six organi-ed chains$ clocking an average annual
groth of around 01 percent. Jalued at around "SR1A5 million$ the organi-ed caf+ market in
India is estimated to be groing at a compound annual rate of 856.
Stirring up the market is IndiaIs groing !outh segment: around 516 of IndiaIs 1.8 billion people
are 85 or !ounger. ,! 8115$ this is expected to increase to 556. 7or this segment$ particularl!
those ith stead!$ disposable incomes$ coffee shops serve as a social hub.
#ccording to industr! estimates$ there is scope for another 5$111 or so outlets strategicall!
located close to offices$ colleges and shopping malls. &hat)s the space the foreign chains ant to
tap. Stirring up the market is IndiaIs groing !outh segment: around 516 of IndiaIs 1.8 billion
people are 85 or !ounger. ,! 8115$ this is expected to increase to 556. 7or this segment$
particularl! those ith stead!$ disposable incomes$ coffee shops serve as a social hub.
In$"eas'n( Co)ee Cons#31t'on
11
IndiaIs coffee consumption pattern gives a clue to the potential that the market holds. &he
nationIs per capita consumption of coffee is just A5 grams$ compared to 0.5 kilograms in 7rance$
0./ kilograms in 4apan and / kilograms in the ".S. &he Indian Coffee ,oardIs numbers reveal
that hile India is the sixth largest coffee producer in the orld$ ith an annual output of
>11$111 tons$ domestic consumption is onl! a third$ or 111$111 tons. &hatIs because like most of
#sia$ India is predominantl! a tea drinking nation. Coffee is a staple onl! in the southern part of
the countr!.
&&
Source :+ttp:FFknow,edgeDw+artonDupennDeduFindiaFartic,eDc/1Gartic,eidH'*60
+ttp:FFwwwDindiacofeeDorgFnews2iewDp+pGnewsidH*3
32 | P a g e
Starbucks Corp.$ the orld)s largest coffee retailer$ as also e!eing the Indian market$ after
having dropped the plan a fe !ears ago folloing some regulator! hurdles. ?o it has made
announcement to enter India to exploit the vast potential of Indian market as mentioned above.
C-allen(es:
12
2ven as the market gets more competitive$ there are strong roadblocks ahead. &he price of
roasted coffee is currentl! at an all(time high of "SRD to "SRA per kilogram$ up /16 since last
!ear. &hen there is the huge real estate cost. 7or most foreign pla!ers$ the rent(to(sales ratio in
India is one of the highest across their global markets. *ith all pla!ers targeting a similar profile
of consumers$ -eroing in on the right location is crucial. 3loria 4eanIs *hite points out that the
mix of high rent costs and lo menu prices puts tremendous pressure on the business.
9anpoer is !et another challenge. 9uch of the success of a caf+ depends not just on the ;ualit!
of the products it serves$ but on the overall ambience and guest experience. &his re;uires trained
staff. ,ut vending coffee is not a highl! skilled job and is lo pa!ing$ hich often results in high
turnover. *ith ever! pla!er on expansion track$ there is a scramble for putting together the best
team. Some brands like CCD and 3loria 4eans) have set up their on training schools$ but for
others itIs a tough task.
*ith more pla!ers entering the arena$ the challenges around managing costs$ even as one strives
to deliver the best international standard of cafe experience$ ill onl! intensif!. Indian
consumers$ hoever affluent$ have ala!s put a premium on value(for(mone! offerings.
#lso due to inflationar! pressures in the econom! in recent times people have started spending
less on frills and save more. #ccording to live mint report that ;uotes ,oston Consultanc! 3roup
sa!ing :ressured b! rising prices$ 086 of Indian consumers plan to cut spending and change
habits to suit the Pne normal . &his piece of nes might bring some disappointment to both
the companies.
&7
Source:
+ttp:FFwwwD,i2e1intDco1F76&&F6*F776&(6<0F'7Indiansp,antocutspendiD+t1,G
atypeHtp +ttp:FFknow,edgeDw+artonDupennDeduFindiaFartic,eDc/1Gartic,eidH'*60
33 | P a g e
Sta"b#$%s: S7OT Anal,s's
*hile anal!-ing Starbucks from the strateg! point of vie$ there is a need to anal!-e the
performance of the compan! in the recent past. #lso$ in order to gauge the compan!
performance$ e have to look$ not onl! at the compan! characteristics but also at the market
characteristics in hich it operates. &herefore$ e ill be using S*L& anal!sis to assess the
compan! characteristics$ here in this project.
St"en(t-s:
9ost of the consumers$ at least in the "S#$ are familiar ith the brand name$ Starbucks
and it is the part of their dail! lives. In "S$ the name Starbucks is being associated ith
;ualit!. &he! are having presence in almost ever! part of the market and hence$ greater
brand visibilit! in comparison to that of their competitors.
Starbucks is having the great advantage over its competitors hen it comes to brand
visibilit!. &his is particularl! because of the large number of coffee outlets$ the! have in
"S. &he! also have large number of international stores in other parts of the orld. &his
allos them to implement ne products ;uickl! across a large demographic and ensures
a large exposure of clientele to prevent ne entrants from gaining market share.
Starbucks is having the ell(established international outlets all over the orld. &his
apart from obvious scale advantage gives them access to lot of international markets. &his
also allos them to confront international competitors before the! enter into the "S
market.
Starbucks has a ellMknon Starbucks has a ellMknon practice to make efforts to preserve the
environment and be ethical in its dealings. Compan! has also initiated the CS. activities hich gives
the compan! a good public image. &his also serves to counter some criticism that its sheer si-e
creates.
Starbucks has been successful in changing the positioning of coffee as the commodit! to
a luxur! product. *ith this$ the! are able to charge premium prices for their product$
something hich might not have been possible before. &his has helped them to create all
ne categories.
3! | P a g e
Starbucks operate around 15$111 stores across 51 countries. &his helps them achieve
economies of scales in sourcing the ra material. It has also premium pricing for its
products$ and thus enjo!s a significant profit margin
7ea%nesses:
#mong masses$ Starbucks is still considered as the luxur! coffee outlet. 9ost of the
customers ill pa! for their products$ ithout thinking tice. %oever$ there is an
increasing notion that Starbucks is literall! fleecing their customers. #lso$ Starbucks
prices are not flexible$ in terms of location. 7or example$ the! charge same price for their
products$ regardless of the countr! the! are operating in.
&he main problem for Starbucks is that$ its entire business rests on the coffee industr!. If
coffee does turn out to be a fad$ the! must diversif! or go out of business hereas other
competitors$ such as Dunkin Donuts$ have investments in a variet! of industries.
#lso$ Starbucks had faced problems in maintaining their outlets in man! of the
international locations. &he! appl! the same business models and formulas$ regardless of
culture and values of the countr! the! are operating in. for example$ In Israel$ Starbucks
has had a hard time taking off because it on)t maintain kosher standards
O11o"t#n't'es:
#c;uisition of brand names such as that of Seattle)s ,est$ E9 Caf+$ and &a-o &ea$
alloed Starbucks to gain exposure to different market niches. Starbucks also offers a
range of products that it sells to other companies such as its bottled 7rappuccinos and
other specialt! goods$ hich expand its market at a loer cost than opening full branches.
Starbucks had used their vast resources in order to develop businesses all over the orld.
&his has alloed them to generate even more revenue and give them better brand image.
#lso$ one of their biggest opportunities continues to be in development of overseas
business.
&here is a great opportunit! for Starbucks in the developing economies like India. &he!
have alread! experimented in china$ hich turned out to be extremel! profitable venture.
3+ | P a g e
T-"eats:
Lther fast food chains like that of 9cDonalds$ Dunkin Donuts$ ,urger <ing$ etc.$ alread!
have the infrastructure in place and are instead adding ;ualit! coffee to their menus to
compete ith Starbucks.
.ising prices of coffee are putting pressure on the profit margins of the compan!.
3roing health concerns among the masses has shifted the demand from coffee toards
health drinks$ juices etc.
St"ate('$ Pos't'on A Sta"b#$%s
*e canIt achieve our strategic objectives ithout a ork force of people ho are immersed in the
same commitment as management. Lur onl! sustainable advantage is the ;ualit! of our
orkforce. *eIre building a national retail compan! b! creating pride in((and a stake in((the
outcome of our labor.H ((%oard Schult- 7ounder and former C2L of Starbucks .#ccording to
this statement$ the human resource is the number one resource in Starbucks Corporation. Schult-
believes that happ! emplo!ees are the ke!s to competitiveness and groth. In 1CC/$ Starbucks
emplo!ed approximatel! 1/$/11 individuals$ including roughl! 15$111 in retail stores and
regional offices. #ll of these Hhapp!H emplo!ees help account for another of StarbucksI
intangible resources((the compan!Is reputation for providing ;ualit! and knoledgeable service.
Starbucks deplo!s their human resources b! re;uiring that each emplo!ee have at least 80 hours
of training. Classes cover ever!thing from coffee histor! to a seven(hour orkshop called
H,reing the :erfect Cup at %omeH. &his orkshop is one of five classes that all emplo!ees
Bcalled partners) must complete during their first six eeks ith the compan!. &his orkshop
focuses on the need to educate the customer in the proper coffee making techni;ues. Store
managers teach the classes. &hese classes are designed to teach the emplo!ees to make decisions
that ill enhance customer satisfaction ithout re;uiring manager authori-ation. #nother a!
that Starbucks ensures that its emplo!ees are content is b! offering a stock option plan called the
,ean Stock :lan. #fter one !ear$ emplo!ees ma! join a 011< plan. &here is a vesting period of
five !earsN it starts one !ear after the option is granted$ then vests the emplo!ee at 81 percent
ever! !ear. In addition$ ever! emplo!ee receives a ne stock option aard each !ear and a ne
vesting period begins. Schult- believes that ithout these benefits$ people do not feel financiall!
30 | P a g e
or spirituall! tied to their jobs. %e argues that stock options and the complete benefits package
increase emplo!ee lo!alt! and encourage attentive service to the customer. Starbucks hopes to
attain a sustainable competitive advantage b! keeping its emplo!ees happ! and trained hich in
turn leads to superior customer service. #s of earl! 1CCA$ Starbucks Corporation Bith the
exception of airport locations) ons and operates 1$851 retail outlets orldide. &hese outlets
include: compan! operated units$ coffee connection outlets$ and licensed kiosks located in
airports. It also operates three roasting and distribution facilities. &he stores range from 811 to
011 s;uare feet$ ith ne units tending to range from 1$511 ( 1$D11 s;uare feet. %oever$ the
intangible resource associated ith these ph!sical resources is the ambience that each store
provides. &he firm emplo!s a staff of over 111 people hose job is to plan$ design and build the
uni;ue interiors and displa!s. Starbucks opens its stores in those cities here its direct mail
business is strong so it can ensure a read! audience. ,! oning and operating most of its outlets
and its roasting and distribution facilities$ Starbucks has a broad range of control. Store design$
training and evaluation$ promotional events$ etc. are all controlled b! Starbucks. &his e;uates to
a competitive advantage over rivals such as SeattleIs ,est Coffee BS,C) ho franchises rights to
its stores in order to expand rapidl!$ but lacks total control of its on operations. #s far as its
other primar! ph!sical resource$ coffee$ Starbucks has a reputation for obtaining some of the
orld)s highest ;ualit! coffee beans. In order to make this ork$ Dave Llsen$ the compan!Is
senior vice(president and chief coffee procurer$ scours mountain trails in Indonesia$ <en!a$
3uatemala$ and elsehere in search of StarbucksI premium bean. %is standards are demanding
and he conducts exacting experiments in order to get the proper balance of flavor$ bod!$ and
acidit!. &his capabilit! of attention to detail and caliber is one a! ho Starbucks delivers a
consistentl! high(;ualit! product. #ccording to the 1CCA SF:$ Starbucks has a :@2 ratio of 0D.1.
&his valuable financial resource indicates that Starbucks is a fast groing and a relativel! lo
risk compan! for investors to invest in. Starbucks is taking advantage of this resource b!
obtaining both short and long(term capital to finance its rapid expansion both domesticall! and
abroad. Starbucks also has resources ithin its compan! partnerships$ and agreements ith
foreign groers and their host countries. :artnerships ith companies such as ?ordstrom and
,arnes F ?oble allo Starbucks to set up shop in arenas suitable to the Starbucks experience. #
joint venture ith :epsi has produced successful sales of 7rappucino ithin supermarkets.
Developing relations ith foreign countries and groers have enabled Starbucks to obtain rights
32 | P a g e
to the ?arino Supremo coffee bean ( one of the highest(;ualit! beans in the orld. &hese
agreements are providing opportunities for Starbucks to expand its product line$ obtain high(
profile locations$ procure reliable sources of ;ualit! coffee beans$ and penetrate foreign markets.
StarbucksI main core competenc! is its abilit! to offer a ;ualit! cup of coffee served b! attentive
and knoledgeable staff in a comfortable environment hile continuing to gro at a rapid rate.
:resentl!$ Starbucks does not have an! rivals that can match its reputation$ nor its abilit! to gro.
&his seems to be the most opportune time for the Starbucks Coffee Compan! to open its shops in
India. Initiall! the! have planned to open up in 9umbai and DelhiN these locations ere
strategicall! picked to ensure success of the business venture and ill serve as test locations. If
the ne stores are highl! profitable$ Starbucks can expand to more than 811 locations in India.
Starbucks India locations ill customi-e their menu to meet the tastes of their ne target market.
&his includes the addition of more tea items taking in accordance that Indians are knon to be
more a Ptea(drinking population$ as ell as adding some ne flavors in their coffee selection.
&he major competition for Starbucks at the moment is the ,arista Coffee Co.$ hich is an
existing coffee shop branch in India$ but Starbucks is expected to gain its market share for
several reasons. &he international popularit! of the Starbucks brand ill help the compan! step
into the countr!. *ith superb marketing and reasonable prices$ Starbucks might take over the
market$ and ith its assurance of ;ualit! and commitment to giving back to the communit!$ the
compan! ill earn brand lo!alt!.
P"o1ose* St"ate('es
1E T-e P"o*#$t
Starbucks Coffee shops sells a variet! of coffee and tea beverages along ith different t!pes of
pastries$ confections$ and baked goods$ coffee(related accessories and e;uipment. &he coffee
shops provide customers ith a pleasant place to come and relax$ stud!$ ork$ or have business
meetings. &he Starbucks Coffee Compan! must customi-e their menu to fit the tastes of the
Indians. # ne menu can be formulated to match up tastes preferences of the Indians knon
alread!. &he inventor! polic! is to keep the stores stocked but not overstocked to ensure
freshness of products. ,etter gauges of the numerical figures in the inventor! policies can be
made after observing consumer trends.
36 | P a g e
2E P"'$'n(
Competitive pricing is necessar! for the success of the venture$ the prices for all good ill be
relative to the others. &he use of penetration pricing ill ease the compan!)s slide into the
market place.
3E P"o3ot'on
&!pes of available media for marketing purposes$ in India are ver! similar to those of the "nited
States$ hich include ever!thing from nespaper advertising to television ads. Since this is a test
venture and there are onl! to locations of Starbucks being opened$ the promotion for the store
has to be ver! focused on our target markets. ,illboard advertising on the roads leading to the
store locations is a good a! to increase aareness of the locations. Direct mail advertising ith
promotional coupons can be used to reach the homes of the target market.
!E Pla$e
&he creation of ne selling points ill enable Starbucks to introduce its products to people ho
have never visited a Starbucks retail store. ,! doing this$ StarbucksI products became more
available. #s Starbucks products are available in different locations$ different t!pes of customers
bu! Starbucks products. 7or example$ the stores near office buildings are visited more b!
business people hile stores in shopping centers are mostl! visited b! families. #broad
StarbucksI products are also available in supermarkets$ here the! are placed at a distinctive
place ith different lighting and elegant packaging to stress its exclusiveness. Due to licensing
and specialt! sales StarbucksI products became available in airplanes from "nited #irlines as
ell as in hotels$ universit! campuses and even office buildings.
Sta"b#$%s. $#""ent St"ate(,
1E Ra1'* sto"e e@1ans'on st"ate(,
Domestic store expansion
# three(!ear expansion strateg!
PStarbucks ever!here approach
38 | P a g e
%nternational store expansion
Compan!(oned and compan!(operated stores or licensing
Created a ne subsidiar!$ Starbucks Coffee International
2xpanding its consumer products channel globall!.
2E E31lo,ee T"a'n'n( an* Re$o(n't'on
S!stems to recruit$ hire and train baristas and store managers
Screening
&raining programs
#ards for partners
3E Real Estate> Sto"e es'(n> Plann'n(> an* Const"#$t'on
# broad range of store formats Bthe right image and character)
# Pstores of the future project team
%igh(traffic$ high(visibilit! store locations
Control of average store opening costs
*i(7i availabilit! at stores
!E Sto"e a3b'en$e
&he concept of Pever!thing matters
#ssessment of standards
+E Co)ee 1#"$-as'n( st"ate(,
Starbucks builds relationship ith groers and exporters$ checks on agricultural conditions and
crop !ields$ and searches out varieties and sources that ould meet its standards. "sing fixed(
price purchase commitment and purchasing coffee future contracts. Contributing to the
!9 | P a g e
sustainabilit! of coffee groers and helping environment conservation. :romoting coffee
cultivation methods that protected biodiversit! and maintained a health! environment.
St"ate('$ Ca1ab'l't'es A Reso#"$es an* Co31eten$,
1: Reso#"$es 1
&he strategic capabilit! of an! compan! is underpinned b! the resources available to it.
:racticall! all resources fall into one of four categories: :h!sical$ %uman$ 7inancial and
Intellectual capital.
P&ysical Resources 1 &he ph!sical resources of Starbucks are the shops that the! on$ an!
vehicles the! on for transporting goods and all the e;uipment that is used to create the cup of
coffee Bor pastr! etc.).Starbucks has around 15$111 outlets around the orld$ and still opening
more in other countries.
2uman Resources 1 &he human resources are the knoledge$ skills and adaptabilit! of the
orkers at Starbucks. Staff ho ork to their potential in these areas often become a compan!Is
Mmost valuable assetI. Schult-$ the founder of Starbucks$ believes ever! member of staff pla!s an
e;ual part in the Mcustomer experienceI regardless of hether the! be C2L or aiter. &he entire
group has 111$111 emplo!ees.
$inancial Resources 1 &hese are the capital$ cash$ debtors F creditors$ and suppliers of mone!
Be.g. shareholders) of Starbucks. Lbviousl! for Starbucks the less debt the! are in$ the more
positive their resource audit looks. Starbucks have a lot of orking capital tied up in the
business. Some of this capital includes varieties of hole coffee beans$ foodstuffs$ teas$ coffee
mugs$ coffee grinders$ coffee(making e;uipment$ filters$ storage containers and other
accessories. A56 of Starbucks revenue comes from direct sales in pubs.
%ntellectual capital 1 &hese are the intangible@immeasurable resources of Starbucks. &his is the
information captured in brands$ patents$ customer databases$ business s!stems and relationships ith
business partners. #ll these can contain great value and hen a business is purchased these values
fall under the price(tag marked MgoodillI. Lne of the fe a!s Starbucks can protect this
!1 | P a g e
intangible information is to ensure emplo!ees sign confidentialit! agreements to protect an!
leaks of knoledge to competitors.
2: Co31eten$es F T-e'" $o31et't'4e a*4anta(e 1Its strateg! of :first to t&e
market:( the brand has been able to emerge as a leader in ;ualit! products and services. %aving
adopted this strateg! has alloed Starbucks to take an advantage over its competitors$ especiall!
in terms of advances in technolog!$ advance the development of alliances ith suppliers in
advance and then on savings related to production ;uantities.
1) ;uality ( &he ;ualit! is indeed a ke! factor in its success$ communication turns around a lot
of this criterion. &he products hich the! kno mostl! calls for coffee and therefore the coffee
beans are mainl! from traditional crops and ;ualit! controls on these products are extremel!
common.
2) Prices ( #nother criterion differentiating Starbucks from its competitors is prices. In fact$
coffee sales at the HCoffee ShopH are more expensive than their competitorsN the ;ualit! of
products offered b! the group is a reason for higher prices.
3) Suppliers ( Lne of the ke! factors leading position occupied b! Starbucks result of the
relationship ith the compan! eaves its suppliers. &hus$ the compan! has retained its
leadership through numerous alliances particularl! in the development of ne products and sales
of its coffee. &he purpose of the brand b! building such relationships ith its suppliers as to
promote the single outside the coffee shop to reach consumers on different levels$ and thus in
ne places such as libraries$ hotels$ or the supermarkets.
4) Customer service ( &he most important ke! success factors hen looking at Starbucks is
their customer service excellence and other activities that enhance or maintain the value of the
product$ e.g. installation$ repair and training. &his area is concerned ith the members of staff
that deal ith the customers$ it focuses on the need to ensure the customer experienceI of visiting
a Starbucks store is all the more enjo!able due to the friendliness and efficienc! of staff and
consistentl! high ;ualit! product on
5) *3ners&ip specific avantages 1 &he Starbucks brand has become almost s!non!mous ith
coffee all around the orld and the same is the situation in India even though India does not have
!2 | P a g e
a single Starbucks outlet. %aving opened its first store in 1CD1$ Starbucks has been highl!
successful in starting a cult folloing that has put the Starbucks brand at a level higher than just
a coffee shop. &he passionate staff and their uni;ue blends of the best coffee beans have
propelled Starbucks as a a! of life in man! parts of the orld. &he vision created b! %oard
Schult-$ the :resident and former C2L of Starbucks$ has resulted in over 1/$111 stores adding
almost 1511 stores in the last one !ear. &he compan! has recorded revenues of more than R 11
billion and over R >11 million in net earnings$ ith an increasing share coming from its
international operations. &he strong financial position and the relativel! lo debt(ratio$ gives
Starbucks a ver! big advantage over its rivals especiall! in terms of expansion strategies and the
abilit! to undertake risks and bu!(out local competition$ irrespective of hich market it chooses
to enter. #dditionall!$ Starbucks has !ears of experience and knoledge about various cultures
around the orld hich gives them an edge in international operations. &heir success in tea(
drinking nations like China and 4apan has to be given due credit and the compan! ill surel!
benefit from these learning hen it looks at the Indian market. Starbucks has built up a
reputation it cannot afford to damage.
#s far as India is concerned$ Starbucks has alread! had prior association and some knoledge
about the Indian market conditions$ economic and political situation and the changes in
consumer trends$ as has been brought out earlier. &heir alliance ith India)s &ata 3roup for
sourcing coffee beans has been in existence since 8110$ and although previous joint ventures
have been unsuccessful$ Starbucks has had relations ith a number of Indian retailers for
entering the Indian market. &his gives the compan! definite advantages as compared to Costa
Coffee Bthe first foreign coffee chain in India)$ hich has been around for a fe !ears no but is
relativel! unheard of in most parts of the countr!. ,esides the above$ the corporate culture$
efficient governance$ and the emplo!ee elfare schemes of the compan! have received ide
acclaim$ making Starbucks one of the best emplo!ers in the "S.
<# %nternali=ation >Control# 1 7olloing up on the onership advantages$ it ma! seem
necessar! for Starbucks to focus on these areas in order to internali-e certain activities so that its
competitive edge is maintained especiall! in India here tough competition is alread! governing
majorit! of the market share. &he most important for Starbucks is its blends of coffee and its
uni;ue roasting techni;ues. &he compan! has to be ver! careful hile entering into joint
!3 | P a g e
ventures in India so as not to lose this advantage to its rivals. 9oreover$ its relations and
contracts ith &ata Coffee for suppl! of coffee beans have to be looked into. &he major issue
here for Starbucks is the continued source of the best coffee beans as one of the major
competitors of Starbucks in India B,arista Coffee) is oned b! the &ata 3roup. &his puts
Starbucks in a precarious situation and there ma! be a need for the compan! to secure other
sources for the coffee beans that it might need for the Indian operations. #nother possible threat
to the onership advantages of Starbucks lies in the prevalent Memplo!ee theft) in India$ and the
strong likelihood of competitors Mstealing) trained personnel and baristas from Starbucks and
thereb! undermining its success in the Indian market. "nder such circumstances it might seem
that an agreement ith a local ell(established partner ould be a safe bet and Starbucks could
look at reviving the relations ith those Indian companies that had shon interest earl! on.
Con$l#s'on
In spite of some drabacks mentioned above regarding the business environment for Starbucks
in India$ the advantages far outeigh the limitations especiall! if Starbucks focuses its attention
on the socio(cultural aspects of the Indian business environment. &he fact remains that India is
an emerging econom! and like all emerging economies$ it ill be plagued b! certain
shortcomings. Lver and above this$ the retail food market in India is expected to gro b! C 6
and although the traditionall! tea(drinking countr! is the largest producer and consumer of tea in
the orld$ coffee has made stead! inroads into the minds and lives of the people serving nearl! a
million people ever! da!. Starbucks has alread! entered most of the emerging economies except
India$ hich seems to surprise ever!one including its potential competitors in India$ and it is
clear from the anal!sis and the arguments provided above that the time is just right for Starbucks
to tr! its luck no$ albeit cautiousl! and ith ade;uate preparation. Lf course$ there ill ala!s
be groups and organi-ations read! to protest against such companies especiall! in emerging
economies here the sentiments toards local companies are inherentl! strong. #fter all$ India is
Bafter China) undoubtedl! the most developing amongst the emerging economies. 7inall!$ ho
Starbucks decides to make its mark on the Indian gourmet coffee market and hen it does so has
to be left to the management of the compan!. %oever$ it might prove beneficial for the
compan! to dell a bit upon adopting a multi(tier strateg! and thinking be!ond conventional
entr! modes in order to harness the immense potential that India holds.
!! | P a g e
TO7S
Anal,s's:
!+ | P a g e
CHAPTER !:
Rea$t'ons an*
O#tloo%s
!0 | P a g e
Co31an, Rea$t'on o4e" a 1e"'o* of t'3e
13
Starbucks breed an agreement ith &ata Coffee$ IndiaIs largest coffee producer$ in 4anuar!.
Starbucks ill source and roast green coffee beans from &ata Coffee and ill also set up retail
outlets in partnership ith the &ata)s. Starbucks ill look to create different entr! points for
different demographics and ill create food relevant to Indian consumers that Sit does notT
provide an!here else.
Starbucks had in fact begun scenting opportunit! in India much earlier$ and initiall! anted to
make a solo entr!. ,ut the compan!Is effort as stalled b! 7DI regulations. India does not allo
1116 foreign onership in single(brand retail outlets and as compelled to take the partnership
route.
Ln announcement of agreement beteen the to parties$ &ata Coffee gained as much as 1D
percent$ the biggest intrada! jump since #ug. 81$ 811C$ to 500.51 rupees in 9umbai trading. &he
stock traded at 0C1.55 rupees at 11:>5 a.m. Starbucks rose 1.D percent to R>8.01 in ?#SD#G
Stock 9arket trading on that da!. &his reflects the confidence that investors sho in both the
compan! and the upcoming deal.
F#t#"e O#tloo% of Sta"b#$%s 'n In*'a
Starbucks is another industr! stalart to enter the Indian markets due to vast potential and the
huge untapped market. Indian market is ala!s influenced b! the traditions folloed in the
*estern counterparts hence the success of 9cdonalds$ <7C
10
$ etc to name a fe. *ith access to
%oll!ood movies here these brands are flashed ;uite often$ the aura surrounding brands such
as Starbucks scale ne heights.
indiaEwit+EtataEaccordEa/terEc+inaEe?pansionD+t1,
14 Mc!ona,ds and K)C are t+e A1erican )astE/ood c+ains
!2 | P a g e
9ovies like Youve got mail starring &om %anks and 9eg .!an
15
$ sho both of them having
Starbucks coffee before leaving for ork leaves a lasting impression on the minds of consumers.
*ith the success of ,arista$ Caf+ Coffee Da!$ the orld is a itness that the Indian market is
read! to usher in Starbucks and make it a successful venture.
Indian consumers have ala!s elcomed change hen it comes to their taste buds. Cappuccinos$
'atte have eclipsed the traditional 2spresso filter coffee. 7ilter coffee seems like an archaic
notion$ onl! restricted to the elderl! people. In fact the coffee shops have itself undergone a
tremendous transformation$ ith them replacing a hang(out joint for the teenagers.
&he timing of their entr! could not have been better. *ith ,arista$ Caf+ Coffee Da! and Costa
coffee almost losing their sheen$ Starbucks comes in like a breath of fresh air. &he future outlook
of an! compan! is not complete ithout an anal!sis of the industr! in hich it operates.
&he coffee inustry of %nia is the sixth largest producer of coffee in the orld$ accounting for
over four percent of orld coffee production$ ith the bulk of all production taking place in its
Southern states. India is most noted for its 9onsooned 9alabar variet!. It is believed that coffee
has been cultivated in India longer than an!here outside of the #rabian :eninsula.
Currentl! it is in talks ith &ata Coffee for an entr! in the Indian shores. &he impact of this
announcement as reflected in the stock prices of &ata Coffee reaching their 58(eek highs
during this period. he to companies ill collaborate on providing training to local farmers$
technicians and agronomists to improve coffee(groing and milling skills. &he to companies
ill also explore social projects in the coffee(groing regions &ata Coffee operates.
&(
$o1 +anks and Meg ryan are t+e Acade1y award winner Ho,,ywood actors
!6 | P a g e
Lne of the hurdles that the to companies have to sort out is Starbucks) franchisee(led business
model U something &ata is uncomfortable ith. &his is an important aspect as this model has
benefitted Starbucks in the past$ ith their market share increasing in proportion to their
increasing number of franchises.
&hat is one of the issues to be sorted out. #part from this$ the union of Starbucks and &ata Coffee
looks to create a froth that ill leave the Indian consumers anting for more.
C&allenges:
?o matter ho lucrative a market is$ but ever! compan! faces certain challenges hen it enters
into unknon aters. Similarl!$ in this case Starbucks is also poised to face certain challenges
hen it enters the Indian market.
7rom our anal!sis$ e feel that Starbucks ill face the folloing challenges in the Indian market:
,lending in the Indian culture:
Jenturing into Indian market is going to be a ne thing for Starbucks. 7or this ver! reason it is
folloing it)s tried and tested franchise model. In this case$ it has ventured ith &ata Coffee to
!8 | P a g e
enter this segment. ,ut still changing its product offerings to suit the needs of each of the market
is an onerous task in itself.
In this regard$ Caf+ Coffee Da! and ,arista have done ell. &he! both have imbibed the culture
in their regular offerings. 7or example$ the! offer seasonal drinks$ for eg Aam Panna, Mango
Shake, etc. in the summer seasons.
&hrough this the consumers can relate to them more easil! as the! can have their regular homel!
drinks at these places as ell. So this has to be taken care b! Starbucks as ell so that the! are
able to in the hearts of the Indian consumer.
:rice sensitivit!:
Indian consumers b! nature are ver! price sensitive. &he! ant more b! pa!ing as less as
possible. *h! this might be a problem for Starbucks can be seen b! the folloing diagram:
+9 | P a g e
&hrough this e can see that a regular simple small coffee costs the consumer as much as .s.
05@( Bassuming a dollar to rupee rate of 1R( .s.05). Similarl!$ the more popular coffee like
Cappuccino and 'atte ould re;uire the consumers to shell out almost .s. C1@( for a small cup.
*hen the consumers are ver! price sensitive$ such prices ould not do Starbucks much good and
it ill have to come up ith attractive pricing strategies to lure the Indian customers. ,ut as the
alliance is ith &ata Coffee$ the consumers might not have to lose their purse strings too much as
the conglomerate is famous for orking for the middle man Bfrom &ata ?amak to &ata ?ano
fame).
Competitive rivalr!:
'ike an! other industr!$ Starbucks ill be facing tough competition from stalarts like Caf+
Coffee Da!$ ,arista 'ava--a and Costa Coffee. #ll of them have been in the industr! for almost
5(/ !ears. During this time the! have gauged the market ver! ell and have reall! left the ne
entrant ith a lot of thinking to do.
&he! have blended in the culture reall! ell and have become a s!non!m for hang out places
and having fun. ,ut folloing strategies can be used b! them to overcome the threat of these
competitors:
,! t!ing up ith certain book stores$ like Crossord$ etc to provide a convenience to the
customer. &hough this has been adopted b! Caf+ Coffee Da!$ but it can be used b! them
as ell depending on the location in hich the! plan to open up their store.
%ave an outlet in music stores like :lanet 9 and 9usic *orld. Imagine listening to !our
favorite music hile sipping a hot cup of Cappuccino. &his ill surel! attract a lot of
consumers.
:rovide hot tea in those mud cups Bkullhars)$ so that the people can relate to them in a
better manner.
&hese are some of the challenges that the! might face and also some measures that the! can
adopt to curtail the competitive rivalr! to some extent. &he other promotional tactics that can be
adopted b! them is too earl! to be commented upon as the! depend upon the location$ time and
the budget of their launch.
+1 | P a g e
Refe"en$es:
.google.com
.cafecoffeeda!.com
.starbucks.com
.barista.co.in
.costacoffee.com
International ,usiness :lan Starbucks India :roposal b! Jrushali :aunikar
Starbucks: Strategic 9arketing :lan b! ,oscheratto$ Chitraju$ Small $&oth and *est
Strategic #nal!sis of Starbucks b! &aghred <hattab$ 2hab #-i- and ,assem ?aguib
Starbucks: Corporate Social .esponsibilit! 7iscal Vear 811>$ #nnual .eport
.cafecoffeeda!.com@Images@,randW:artnerships.pdf
http:@@globalcoffeegrind.hubpages.com@hub@Costa(Coffee(7ails(in(India
http:@@.livemint.com@8111@1D@1/8>>0>/@India(mulls(7DI(in(multi(brand.html
http:@@.business(standard.com@india@nes@costa(coffee(bres(mass(
market( plan@0>88A0@
http:@@.bloomberg.com@nes@8111(11(10@starbucks(takes(first(step(to(india(
ith( tata(accord(after(china(expansion.html
http:@@.livemint.com@8111@1/@881151>D@08Indiansplantocutspendi.htmlXat!peYtp
http:@@knoledge.harton.upenn.edu@india@article.cfmXarticleidY0/1D
http:@@.indiacoffee.org@nesvie.phpXnesidY/A
http:@@.afa;s.com@nes@stor!.htmlXsidY8/8CA
+2 | P a g e
http:@@.indiacoffee.org@indiacoffee.phpXpageY9odalitiesImplementationDevelopme
nt
+&e Star!ucks Corporation: Past( Present an $uture ,! %erv+ .. #"C%(.LV =
:2?: 181D%# December 81$ 8110.
Starbucks: :art of Vouth Culture b! :eter De!
+&e $uture of Star!ucks : #n #nal!sis b! &eam 9acchiato b! Kack %igbee$ Chen Vee
'ia $Calvin &ing $$<evin &jho $9ichelle &on
:#.&?2.I?3 &L SC.I:& S"CC2SS S&L.I2SO( from cafecoffeeda!.com
Environmental 8overnance in t&e Coffee $orests of ?oagu( Sout& %nia
Transforming Cultures eJournal, Jol. > ?o 1$ 7ebruar!
811A
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+3 | P a g e