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Starbucks Opens First Store in India

  • Anjana Pasricha

Indian employees of the newly inaugurated first India outlet of Starbucks work at a counter in Mumbai, India, October 19, 2012.

Indian employees of the newly inaugurated first India outlet of Starbucks work at a counter in Mumbai, India, October 19, 2012.

The world's largest coffee chain, U.S.-based Starbucks Corporation has opened its first store in India. The move comes at a time when coffee is winning new fans in India, traditionally a tea-drinking country.

From a 370 square-meter outlet spread over two levels in an upscale Mumbai neighborhood, Starbucks began serving its first cappuccinos and lattes in the Indian market.

Both in its décor and products, the Starbucks flagship store has an Indian touch. There are vintage trunks, hand carved-wooden screens and tables of Indian teak.

The coffee it serves is prepared with coffee beans grown in India. Some food items such as chicken tikka Panini, cardamom croissants, and tandoori cottage cheese rolls have a local flavor. And to suit the pockets of a cost-conscious market, Starbucks has priced some products lower than in other countries - it will sell a "short" espresso for a little more than $1.50.

Chief executive of Starbucks, Howard Schultz, who came for the store's opening Friday night, called it "perhaps the most beautiful, elegant and dynamic store we have opened."

Starbucks comes to India in alliance with an Indian partner, Tata Global Beverages. It must compete with a host of coffee chains - both local and international - that are already established in India.

Although India is traditionally a tea-drinking country, over the past decade, cafes have become the new social hot-spots, particularly among young people.

The chairman of an industry body, the India Coffee Trust, Anil Bhandari says "out-of- home" coffee consumption has grown phenomenally - it doubled in the decade up to 2010. He says there is plenty of room for new chains to grow.

"Coffee drinking is on the crest of a major wave in this country and Starbucks is coming just in time, just at the right time to ride that crest," said Bhandari. "You have a 250-300 million middle class in this country, so that I don't think there is any dearth of mass of consumers for Starbucks."

Starbucks will have to catch up with coffee chains that have already spread across the country. The biggest coffee chain, Café Coffee Day, has over 1,300 stores. Starbucks will build its presence slowly - it is opening two new outlets in five-star hotels in Mumbai next week. And it will open its first store in the capital, New Delhi, next year.

Pratichee Kapoor at Technopak consultancy in New Delhi says Starbucks will be able to make quick inroads because it has a "great brand pull."

"Being an international chain they will have an edge," said Kapoor. "Plus just going to a Starbucks and carrying a Starbucks cup itself brings you in consumers mind, gives them some sort of edge, even whether it is buying their merchandise, buying their coffee or the fact that they have visited Starbucks or they have tried Starbucks coffee, the brand has a great resonance in consumer's mind. So I think, it should not be difficult for them to carve a niche."

Starbucks comes to India at a time when growth is slowing in the United States and Europe. Chief executive Howard Schultz says that the Asia Pacific region has emerged as a key driver for growth and that India, along with China, lies at the core of that strategy.