Rs. 198/- for a coffee?
Starbucks, the world’s biggest coffee-shop chain, will enter India in partnership with Kishore Biyani, founder of the biggest publicly traded Indian retailer, and V.P. Sharma, head of the U.S. company’s Indonesian franchise.
Starbucks will form a venture with Sharma, president director of Mitra Adiperkasa, and Biyani, managing director of Pantaloon Retail India, Sharma said in a telephone interview last week. He declined to provide financial details or say how much of the venture will be own by Starbucks.
Entering India would support plans by Starbucks to triple its stores to 40,000 worldwide by expanding into emerging markets. It will compete with local chains Barista Coffee and Cafe Coffee Day in a market that McKinsey estimates will create 65 million middle- income Indian households by 2010, up from 40 million now.
“It’s a status symbol to have a Starbucks cup in your hand in these countries like China, and I think that’ll translate to India as well,” said Rick Drake, director of research at ABN AMRO Asset Management in Chicago. “More Indians are working in these professional jobs that give them more disposable income.”
The Starbucks’ venture will be with New Horizons, which is 51 percent held by Sharma with the remainder owned by Biyani. The venture plans to open its first store in New Delhi by the end of the year, Sharma said.
I used to go to Cafe Coffee day and Barista for formal meetings. I can’t even think of paying more than Rs.10 for a coffee in India.
Starbucks will have to fight hard in India. It’s going to be very interesting to watch.
Starbucks will be opening outlets in a market where tea is still the most popular beverage, but according to the Coffee Board of India, Indian coffee consumption has grown at an average annual rate of more than 6 percent in the past six years compared with stagnant consumption in the previous eight years.
“Coffee is becoming more popular in urban areas as more disposable income comes into the hands of young Indians and the number of coffee outlets with fashionable ambience increases,” G.V. Krishna Rau, chairman of the state-run Coffee Board, said in a telephone interview. “The growth of coffee chains has clearly led to a spurt in consumption in the past five years.”
Coffee is the beverage of choice in southern India while tea still remains the most popular in northern and eastern parts of the nation. The four southern India states of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh account for about 80 percent of the coffee consumption in India, Rau said.