Coffee for Everyone?

India and China

Both India and China are still small players in terms of domestic coffee consumption. China has one of the world's smallest coffee markets whereas India ranks 36th out of 53 nations with the most sales of packaged coffee, according to market research firm ACNielsen. The United States tops the list, followed by Germany, France, Japan and Italy.

However, patterns are shifting in India and China due in part to changing consumer aspirations and a keenness to indulge in the "Western" experience.

Starbucks captured a niche market early in China. It's a slightly different story in India, where a coffee revolution has been quietly brewing and the retailer may already have lost the first-mover advantage.

Barista and Coffee day outlets are prevalent across the country in all the major cities and metros. They have acquired prime real estate locations and were able to capture the market within the age group of 16 to 25 very effectively while charging upto 10 times the price of a regular cup of coffee.

The Startbucks Strategy

Each coffee Starbucks is currently worth around $3.50 and whether or not the Indian consumer wold pay such a high amount is questionable, but it definitely isn't impossible considering the "experience" each of these outlets would provide on similar lines with the other existing Indian chains.

One of the main reasons for the probable success of Starbucks in India is the already popular brand image it has created for itself without too much of a direct effort. The name is famous across the stated target age group mainly due movies, magazines and other forms of exposure to the Western Universe.

Barista's Management feels that it has established itself as a strong brand with a good brand loyalty association among its consumers. Whether Starbucks confronts these chains directly or tries something niche is yet to be seen. But with the hassles it is currently going through trying to get an Indian partner for entry the confrontation seems a little far away.