Starbucks anchors in India

With the Starbucks cafes set to launch in India later this year, the joint venture between Starbucks Corp and Tata Global Beverages Limited, part of the global Tata Group, has already started creating ripples in the industry.

The unison

Way back in January 2011, Starbucks and Tata Coffee announced plans for a strategic alliance to bring Starbucks to India and also to source and roast coffee beans at Tata Coffee's Kodagu facility. The MOU also implied Tata Coffee and Starbucks to jointly explore the development of Starbucks retail stores in associated retail outlets and hotels. Finally, the recent 50-50 JV was named TATA Starbucks Limited. It will own and operate Starbucks cafés, which will be branded as Starbucks Coffee “A Tata Alliance”. Since 1971, Seattle-based Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest-quality arabica coffee in the world and is already present in 57 countries. The coffee retailer has set out to explore the Indian territory, which has, till date, remained an untapped market for them.

The implications

The two companies will start in India with an investment of $80 million and plan to add funds as the business expands. The stores are expected to be opened across the country, commencing with stores in Delhi and Mumbai in the initial phase. An official press release said, “In a separate sourcing and roasting agreement between Starbucks Coffee Company and Tata Coffee Limited, Tata Coffee Limited will roast coffee to supply Tata Starbucks Limited, and to export to Starbucks Coffee Company.” Together, the JV will enable an expanded range of beverage offerings for Indian consumers. As an example, the companies have agreed to jointly leverage assets and innovation to offer a premium tea product branded, Tata Tazo. “The joint venture with Starbucks is in line with Tata Global Beverages’ strategy of growing through inorganic growth focusing on strategic alliances, in addition to organic growth,” stated R K Krishnakumar, Vice Chairman, Tata Global Beverages. “It opens up exciting business opportunities and new formats for Tata Global Beverages. “Starbucks brings unique retail expertise as well as a shared sense of business values. We are excited about the opportunities the alliance presents to innovate in the retail space and bring new beverage experiences to more consumers in India, leveraging the global in- home expertise of Tata Global Beverages and the global out-of-home expertise of Starbucks,” he added.

“We’re very pleased to have found the best partner for Starbucks in Tata – a company that shares so many of the same values for conducting business in a way that earns the trust and respect of our customers and partners (employees),” said John Culver, president, Starbucks China and Asia Pacific. “We look forward to bringing the Starbucks Experience to customers in India by offering high quality arabica coffee, handcrafted beverages, locally relevant food, and legendary service,” he added.

More than just a JV

Interestingly, Starbucks and Tata share common values of responsible business ethics and a commitment towards community. Tata Coffee Limited has been working to improve the lives of coffee growing communities in the state of Karnataka. Through an initial financial commitment, Starbucks will work with Tata to support 'Swastha', a school for children with special needs (in partnership with the Coorg Foundation) and aim to increase its capacity and outreach into the rural communities in the coffee growing region of Karnataka.