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Strategic Alliance of Tata Coffee and Starbucks

By-Anita Sharma Prestige Institute of Management, Gwalior

Indian Coffee Industry

Indian Coffee Industry The coffee industry of India is the fifth largest producer of coffee in the world, accounting for over four percent of world coffee production, with the bulk of all production taking place in its Southern states Avg. Coffee consumption in India is 10 cups per day. India is the only country that grows all of its coffee under shade. Indian coffee has a unique historic flavor.

Starbucks coffee and Tata coffee signed MoU (Memorandum of Understanding) on 13 January 2011. The MoU was aimed at collaboration between the two companies for sourcing and roasting high quality green coffee beans in Tata Coffees facility in Coorg in South India. Moreover, the two companies is jointly explore the development of Starbucks retail stores in associated retail outlets and hotels. The Mou was an important step taken by Starbucks towards market entry. On 12 January, 2012 they have announced to open outlet in Mumbai, Delhi, Bangalore

Tata Coffee

Area of business

-Grows

coffee on its own estates, -Processes the beans, -Exports green coffee, -Manufactures and exports Instant Coffee

Competitive Advantage of Tata Coffee


The largest integrated coffee plantation company in the world . It's uniqueness lies in its ability to produce large quantities of estate specific, strain specific, special and premium coffee, while maintaining a strict consistency in quality. It has a hand in every aspect of the coffee making process With the major coffee consumption markets being Arabica-centric, this lobby has been prevailing in international markets by Tata coffee.

Starbucks

It is an international coffee and coffee house chain based in Seattle, Washington. Starbucks stresses quality above price and other feature s it could emphasize. Starbucks specializes in coffee and related beverages. The company sells coffee, Italianstyle espresso beverages, cold blended beverages, as w ell as a selection of premium teas and coffeerelated accessories and equipment.

Competitive advantage of Starbucks

Strong brand image Starbucks specializes in coffee and related beverages.

Starbucks is the largest coffeehouse company in the world.


They have loyal customer worldwide.

Marketing Strategy of Starbucks

Starbucks started a community website, My Starbucks Idea Its rare to find a Starbucks ad in a billboard, ad space, newspaper or poster in places. The company has went to great lengths to create a community atmosphere among premium coffee lovers. Starbucks operates primarily through joint ventures and licensing arrangements with consumer products business partners

About the deal


*Starbucks is coming India with joining hand to Tata Coffee. *Starbucks will explore setting up stores in the Tata group's retail outlets and hotels, besides sourcing and roasting coffee beans Tata Coffee's Kodagu facility.
*This Agreement includes opening cafes, bean sourcing and roasting.

*One of the hurdles that the two companies have to sort out is Starb ucks franchisee-led business model

Objective of Tata Coffee behind this deal

The agreement will allow Tata coffee to provide roast coffee bean to Starbucks in India. Get opportunity to jointly invest in additional facility for export to other market. Starbucks provide new technology to the promotion of responsible agronomy practices. A long term relationship will be formed with this MoU with Starbucks. After this deal, Tata Coffee is become Asias biggest publicly traded coffee grower

Objective of Starbucks behind this deal

Starbucks aiming to enter in Indian market through this MoU. Starbucks believe that India can be an important source for coffee in the domestic market, thats why they enter in India. The knowledge and understanding of the Indian market can be brought by Tata Global Beverages, because it has been in this play for a while The Tata also have an arm in retail so theres a synergy there as well.

Relationship Marketing.

Starbucks and Tata Coffee developed a long term and i ntimate relation-ships. Through this deal they developed open communication With this MOU Tata Coffee able to know the requirement and preference of Starbucks more closely

SWOT Analysis
Strength Both the companies are leading in their sector Social project in India. High quality green coffee beans. Consider jointly investing in additional facilities for exports to other markets. Utilize resources of each other enhancing core competencies Opportunity * Coffee consumption in India is expected to grow.(6%) * Global players who are in the market of coffee outlet they can approach Tata coffee for there raw material Weakness The selling price of starbucks is not cheap The entry of starbucks has on out of home coffee consumption market and this will affect alliance of Tata cofee with barista From both the side there is no exclusivity on each other

Threats * Starbucks need to address pricing issue for India, since demand is highly elastic * There are several competitors in the segment for starbucks.

This deal will be beneficial for both the side, because this deal has given a new phase to both the company. As Starbucks prospect After having MoU with Tata Coffee ,Starbucks is able to enter in Indian emerging market. From Tata Coffee prospect, after this deals they are entering in coffee retail outlet business, which is also giving a new phase to TATA Coffee.

They may be revolutionized the Indian coffee retail outlet industry.