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A match made in Delhi: Starbucks and Tata

From the May 2012 issue.

As Starbucks prepares to open its first retail location to share a nameplate, company leaders tell GCR that the teaming up was an alignment of values as much as it was a strategic fit.

india and starbucksIt could be said that Tata is as ubiquitous to India as Starbucks is to coffee.

In almost any Indian city, one would struggle to escape the Tata Motors logos driving past Tata Indicom telecommunications posters, decorating the way to Tata Steel and Tata Chemical factories. In the 2010-11 financial year, Tata Group’s total revenue from its Indian operations amounted to around US$35 billion. The Tata Group comprises over 100 operating companies, with coffee and tea covered by Tata Global Beverages and Tata Coffee Limited.

It’s the kind of magnitude that Starbucks can relate to. The American giants reported their 2011 net revenues as reaching a record US$11.7 billion, thanks to over 17,000 stores it operates worldwide, branded coffee it sells on grocery shelves, and the Starbucks K-Cups it produces for the Keurig single-serve system.

The official announcement in January that Starbucks and Tata Global Beverages were pooling US$80 million for a 50/50 joint venture seemed a natural match of two companies of such large proportions.

But as John Culver, President China and Asia Pacific, tells GCR, in looking for a partner, it was more than size that mattered. Starbucks has been eyeing Indian operations since 2006, taking its time to look for the right partner. Apart from the common thread of large-scale commercial success, it was a matching of values that both sides attribute to sealing the deal.

“We firmly believe that Tata and Starbucks share many of the same values for conducting business in a way that is responsible and earns the trust and respect of our customers,” says Culver. “Tata is a known leader with a proven track record in delivering quality and value to customers.”

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