Starbucks To Expand Into Tea-Drinking India

Jan 31, 2012
Originally published on January 31, 2012 4:47 am
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Starbucks, the coffee chain, is trying to break into one of the biggest markets in the world. Starbucks is planning to open its first stores in India, a country better known for drinking tea.

Elliot Hannon reports on what the caffeinated superpower will find when it gets to India.

ELLIOT HANNON, BYLINE: Grande no-whip, low-fat lattes may not have been a household term in India, but that might be about to change. Starbucks announced its official entry into the country yesterday, with plans to open 50 stores before the end of the year. It's teaming up with Indian corporate giant Tata. Its first stores are set to open in Mumbai and New Delhi this summer.

In India, Starbucks enters a market that is already thriving. India's youth have developed a taste for coffee, and consumption has almost doubled over the last decade. This shift, however, has been one of culture as much as taste, says Arvind Singhal, the head of Technopak consulting firm in India.

ARVIND SINGHAL: Actually, India's - it's not so much about the growth of coffee as it is about the growth of cafe culture. I think they're willing to pay for the experience. They're not necessarily paying extra for the coffee.

HANNON: Starbucks may have been the catalyst for this cultural shift, even from afar through pop culture. But competition for coffee drinkers is already stiff. Home-grown companies have exploded over the last decade, offering a Starbucks-like experience. Indian coffee company Cafe Coffee Day now has over 1,200 stores in almost 200 cities. Foreign competitors, like Italy's Lavazza, already have opened stores.

However, in a country of over 1 billion people, there's enough room for everyone, says Singhal.

SINGHAL: Even if you were to address the top 20 percent only of this population, you're looking at a population which is potentially the same size as the entire United States. And I see no reason why India, like China, would not be able to support two, three, four, 5,000 Starbucks stores.

HANNON: For NPR News, I'm Elliot Hannon in New Delhi. Transcript provided by NPR, Copyright NPR.