Is Starbucks "star" waning?

by chee leng-Oncoffeemakers

Starbucks in India

Starbucks in India

Over the years, Starbucks has gone into instant coffee Via (alright, it is not instant coffee), it has build a single serve coffee machine Verismo and it has partnered with companies such as GMCR (Keurig).

Starbucks has done many things to grow its presence. But, it has never shared the platform, it is always Starbucks, no co-branding.

Until last October in India, when it opens its first Starbucks outlet with Tata Group. It co-brand with Tata Group.

Currently, there are 7 such outlets in India, and it is said that there are plan to grow another 50 or so outlet by this year.

So, why will Starbucks go for co-brand in India, when they are doing it alone in China?

My $0.02

When I saw in an article that Starbucks is doing co-brand with Tata group in India, my thought is why India? Is India a tougher retail scene than China?

I came out with a few reasons Starbucks is doing that in India, you see if you agree with me.

The partner

Tata Group is big in India, and the brand recognition of Tata is immediate. While Chinese go for Western and regard US products as more superior, it might not be true for folks in India.

Tata brand recognition in India is definitely superior to many western brands, and definitely more well known than Starbucks.

Thus, the branding with Tata in India is a leverage for Starbucks, it gains them wider market share.

The vested interest

Starbucks has been doing Franchising for years, but franchising involves monetary investment and nothing more.

Supposing, Tata would to be a Franchisee, other than investing money, it is not linked to the brand. That means if Starbucks do not take off in India, there is no detrimental impact on Tata.

With a Co-brand, Tata has a vested interest to ensure that this venture works. Failing has a direct impact on Tata.

The regulation

I did not go into the taxation or regulation of India, but I believe as a tea producing country, India will protect the interest of its tea industry.

Thus, forming a venture and doing a co-brand with Tata might ease the entrance into India for Starbucks.

I believed functioning as a Tata-Starbucks entity is much easier to go around the legislation and perhaps avoid all the red tax versus going in as Starbucks.

This is my thought on why the need for co-branding, what it your thought?

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