Starbucks will open its first store in India this August, more than five years after it announced plans to move into the world’s second most populous country. Between September and December this year, the coffee giant expects to open around 50 stores in Mumbai and New Delhi.
It was never meant to be this late, however. Back in 2007, the company said it wanted to reach 40,000 worldwide stores by the end of 2012. However, the recession and overly aggressive expansion put paid to that. Currently, there are ‘only’ 17,250 stores worldwide. According to John Culver, president of Starbucks’ Asian Pacific region:
“We’re going to be very disciplined in how we grow. The rate at which India is growing, the size of the emerging middle class and the growth of disposable income lead us to believe it’s going to be a very large market for Starbucks over time.”
Perhaps the biggest question mark hovering over the move to India concerns local tastes. India is a nation of tea-drinkers, and the world’s biggest tea exporter. It has coffee farms in the south of the country, but an overwhelming majority of Indians prefer tea. However, Culver claims coffee is becoming more popular, especially with young people and a rapidly emerging middle-class.
Also, Starbucks has already performed well in another vast, tea-drinking nation. In October 2011, Starbucks opened its 500th store in mainland China, and the brand has enjoyed massive success. The appeal of Starbucks in such places is down to it being – and here’s a term to make one’s stomach turn like month-old latte – an aspirational brand. Sharon Zackfia, analyst at William Blair & Co, explains:
“It’s probably less what you’re selling than what the brand represents, which is a certain level of status. It’s the first luxury item most people can afford.”
We’ll find out just how aspirational Indians are a few months from now.