Tata-Starbucks, a coffee retailer, is a Joint Venture Between Tata Beverages and Starbucks Coffee Company of US entered into India in 2012 by opening an Outlet in Mumbai. As on FY2023, it completed 10 years of presence in India marking annual revenue of Rs 1,087 Crore with 341 stores in 43 Indian Cities. They have experienced 71% Year on Year Growth in FY2023. It has over 2,000 employees as on 2023. In 2022, Tata Starbucks for the first time introduced “Reserve Store” concept in their First Outlet; catering with more exclusive handcrafted beverages. This specific case study describes the Tata Starbucks Growth Strategy and Competition Strategy.
Recovering The Business: As on November 2022, Tata Starbucks was receiving customer visits to the level of before pandemic, as was in 2019. In 2022, They were serving 333,000 Customers every week. Stores in Office Spaces took more time to recover with respect to customer visits, because of employees were working from home in several companies. The situation on Office stores was also improved post hybrid work model was introduced in several companies.
Tata Starbucks India Strategy: As on 2021, Tata Starbucks has ambitious growth plans for India, and they were customizing the menu according to the local taste.For Tata-Starbucks, India is the fastest growing coffee market outside USA. As on 2021, 20% of its revenue is coming from Food/eateries out of their total menu; which is a major share in Asian markets. Hence, in addition to beverages, Tata-Starbucks would like to customize the food items. In 2021, it has 118 outlets across 7 cities in India. In last 2 years, 120 outlets were added. It has plans to expand to Tier-II cities as well. They were innovating in different ways of brewing, roasting and making coffee and food items in their stores. In 2021, they could achieve 28% growth rate in their revenues. In 2023, they could achieve 71% growth over previous year.
Tata Starbucks wants to make themselves as Premium brand for the value conscious Indian customers. Their India specific initiatives included introducing customized products such as “Masala Chai”, “Filter Coffee”; “Elaichi Chai”; introducing a small cup concept known as “Picco”, which was introduced in India, was first of its kind globally in Starbucks. With respect to food items they introduced bite-sized food items sharable to family and group of customers. According to CEO, Tata Starbucks, Inflation has not having major impact on their business, consumers are spending, and Tata Starbucks is adding more outlets to their business. Their growth numbers have been stronger.
Other Growth Strategies: As on April 2020, Tata Starbucks was thinking about starting online retailing/ecommerce of their products through omni channel home delivery approach; and also they were planning to have drive-throughs (as McDonalds has drive-throughs in India as well) for their stores. These Two Growth Strategies they adopted during the pandemic. Their customer experience creation strategies include introducing digital payments and payments through mobile apps. Tata Starbucks is confident about their loyal customers who come not only for coffee but to spend some time there. In 2023, Reserve stores were offering rare, small lot coffees.
Digital Strategy: As on 2022, Tata Starbucks was engaging with 1.3 million customers using different digital approaches such as Mobile Phones, Apps, WhatsApp, Instagram and Other Ecommerce players. They are also selling their products through different ecommerce players.
Competitive Strategy: As on 2023,Tata Starbucks encountering competition from Canada based Tim Hortons who entered into India and would like to open several outlets; UK based Pret A Manger, who also has ambitious plans for India; and Bangalore based Third Wave Coffee expanding to Other parts of the Country (50% of their outlets are in Bangalore only). Tata Starbucks in India will be competing with these players in India related to retailing coffee. Not only that, McDonalds in India is also selling Coffee. Burger King in India with economy menu, and McDonalds in India are innovating continuously with their menu items; several players are introducing cold and hot coffees/teas/beverages.
However, the growing economy, food lovers in India, coffee/tea loving workaholics in India will continue to support this food and beverages industry in India. Because Product Development involves consumption of so many cups of coffee and tea. As the Indian Products are growing, this industry is also bound to grow.
Happy Reading.
Dr.Goparaju Purna Sudhakar
References:
- Srinivas, A. (2021), “Tata Starbucks Brews Two Pronged Strategy to Sustain Growth”, The Hindu Business Line, December 07, 2021.
- Ambwani, M.V. (2023), “Tata Starbucks Speeds Up Growth Plans with New Indian-inspired Menu”, Business Line, March 08, 2023.
- PTI (2020), “Tata Starbucks to Launch Drive-Through, Home Deliveries”, Live Mint, April 12, 2020.
- Vaid, R. (2022), “Inflation has not Hurt Demand, says Tata Starbucks CEO”, Moneycontrol.com, November 21, 2022.
- Malviya, S. (2023), “Tata Starbucks Eyeing Strong Growth”, The Economic Times. May 08, 2023.