Starbucks is the world’s largest coffeehouse company with a presence in 65 countries around the globe. As coffee shops were nearing saturation in the US and Europe, Starbucks identified the potential for expanding in emerging markets like China and India. Though China is mainly a tea-drinking nation, Starbucks won over this market with its localization and customization strategies. Starbucks believed that India provides a good business opportunity, given the size of its economy, rising spending power of the people, and the growth of café culture. In 2012, the company set up its first store in India. Initially, Starbucks’ stores received good response, but then faced challenges such as competition from organized and unorganized coffee (and tea) shops, high pricing of its products, getting the right store location and talent pool. The present case aims to analyze the challenges and opportunities that Starbucks face in the Indian market, and the marketing strategies that it should follow in the Indian market. Analysis suggests that Starbucks should adapt to the peculiarities of the Indian market. ‘Glocalization’ strategy can be adopted, which would use the successful Starbucks’ strategy used around the world, at the same time taking into account the changes required to suit the Indian context.

Starbucks is the world’s largest coffeehouse company with a presence in 65 countries around the globe. As coffee shops were nearing saturation in the US and Europe, Starbucks identified the potential for expanding in emerging markets like China and India (Agrawal and Sharma, 2012). Though China is mainly a tea-drinking nation, Starbucks won the Chinese consumer with its localization and customization strategies. Starbucks’ success in China encouraged the company to enter India, which too is primarily a tea-drinking nation. India is one of the emerging markets where personal disposable income per capita doubled between 2000-01 and 2009-10, resulting in vastly improved purchasing power (Deloitte, 2011). The upper and middle class segments in urban India were spending more money in coffeehouses. Moreover, Starbucks believed in the size of the Indian economy, the rising spending power of Indians and the growth of café culture among the Indian youth, which would hold strong potential for its growth. The company had been planning to enter the Indian market since 2006, but FDI restrictions had dissuaded it from doing so.

Eventually, in 2011, the company signed an MoU with India’s Tata Group to tap the Indian market potential. In January 2012, it formed a 50-50 joint venture with the Tata and established its first outlet in October 2012. By March 2014, the number of stores had increased to 50. Initially, Starbucks received good response; but then, the company faced several challenges in achieving sustained growth, such as competition from other coffee (and tea) outlet chains, high prices of its products, and obtaining appropriate retail locations and talent pool.

Brand Management Journal, Starbucks’, drinking nation, Starbucks, The Global Coffee Retailer, Starbucks’ Success Formula, Philosophy, Starbucks’ Entry into China, Approach, Tea-Drinking India.