TATA- STARBUCKS

NIKITA AGARWAL E-03

HISTORY OF STARBUCKS
Starbucks Corporation is an international coffee and

coffeehouse chain based in Seattle, Washington.

Starbucks is the largest coffeehouse company in the
world.

History of TATA Coffee

Tata Coffee is Asias largest coffee plantation

company and the 3rd largest exporter of instant

coffee in the country.
It exports green coffee to countries in Europe,
Asia, Middle East and North America

Strategic Intent
India and China are the worlds two fastest growing

economies. Starbucks had already ventured into the

Chinese market and not surprisingly, their Chinese
venture turned out to be much profitable than that of
their US business.
Thus, they want to replicate their success in Chinese
mainland in India. Also, the Indian market is heavily
driven by the upcoming youth culture which is
totally driven by the western trends.

With the success of Indian owned Caf Coffee Day

and Barista Coffee, it is a widely proven fact that

there is lot of scope for the development of coffee
caf culture in India.
Thus, Starbucks want to capitalize on this particular
opportunity.

Starbucks Mission Statement

To inspire and nurture the human

spirit one person, one cup and one
neighborhood at a time.

STARBUCKS PREVIOUS ATTEMPTS TO ENTER

INDIA
Starbucks had tried to enter India by striking an

alliance with Kishore Biyani's Future Group three

years ago, but these plans were rejected by the
Foreign Investment Promotion Board.
A year ago, Starbucks revive its plans for India and
began talks with Shyam and Hari Bhartia-controlled
Jubilant Group for a possible alliance.

ALLIANCE

Alliance

On January 2011, Starbucks Corporation and Tata

Coffee, Asia's largest coffee plantation company,

announced plans for a strategic alliance to
bring Starbucks to India.
Starbucks has announced its entry to India by signing a
non-binding Memorandum of Understanding (MoU)
with Tata Coffee Limited.
The MoU will create avenues of collaboration between
the two companies for sourcing and roasting highquality green coffee beans in Tata Coffee's Coorg,

India is one of the fastest growing coffee markets in the

world with a potential for over 5,000 coffee bars. The

coffee retail market in the country is expected to grow
at an annual rate of over 40%. So, there seems to be
enough room for all to brew and grow.
In accordance with the MoU, the two companies will
collaborate on the promotion of responsible agronomy
practices, including training for local farmers,
technicians and agronomists to improve their coffeegrowing and milling skills.

R K Krishnakumar, Chairman of Tata Coffee, said,

We welcome Starbucks entry into India because of

both its unique experience with the store format and
for its commitment to society, values that we share.
India is one of the most dynamic markets in the
world with a diverse culture and tremendous
potential, said Howard Schultz, Chairman,
President and CEO, Starbucks Coffee Company.

PORTERS
FIVE FORCES
FRAMEWORK

Strengths

High Brand Visibility.

Superb Marketing and positioning skills of

Starbucks.
Access to TATA's premium Robusta and Arabica
coffees (Sourcing Agreement).

Weakness

Image of luxury coffee outlets.

High price of coffee is felt as a barrier
Coffee dominant business. (need to diversify)
Certain rigid standards and policies at outlets.

Opportunities

India is the second most populated country in the

world.
Growing Middle Class and increasing spending
power of Indian Population.
Tea-based culture of India could be used as
opportunities by offering more tea-based drinks.

Threats

India is a tea-based culture.

Rising prices of coffee are putting pressure on the

profit margins of the company.

Visiting cafes is not a frequent habit among most of
the Indians.
Homegrown brands dominate the retail coffee
market.

Advantage of Alliance to starbucks

The knowledge and understanding of the Indian

market can be brought by TATA Global Beverages.

Starbucks will benefit from TATA Globals

infrastructure.
TATA has a local knowledge on the real estate

market and they have opportunities to leverage their

capabilities in this area.

Advantage of Alliance to TATA

TATA Group will also benefit from the pact. TATAs

experience in retailing is not sufficient to open a

coffee retail shop on their own; so, by entering in
such alliance they will gain a vast amount of
knowledge.
TATA Global Beverages produces bottled

Himalayan water which might be offered in

Starbucks stores around the world.

Disadvantage of Alliance
After gaining enough knowledge in retailing industry

and knowing the Indian market better, TATA might

decide to compete with Starbucks instead of
working with them.
Potential conflict might occur regarding the strategy

of the alliance and how it should be managed.