This is a join venture between Tata Global Beverages and Starbucks Corporation. Both the companies owns 50% if the companies share. It is know as Tata Starbucks Limited and founded on 19 October 2012. It is operated in India and has 115 stores. Tata Beverages is an Indian tea and coffee plantation company and Asia’s largest coffee plantation company. Starbucks is an American coffee company and coffeehouse chain. It is known as Starbuck A Tata Alliance in India (Tata Starbucks, 2019). The first store was opened in Mumbai on 19 October 2012 and then they started expanding to different cities. This has opened the new market entry opportunity for Starbucks in Indian market and the increasing trend in the beverage market has helped Starbucks to get good number of market share. All coffee that are sold in the Indian outlets are supplied by Tata Coffee (Tata Starbucks, 2019).
There are various products that represents the Indian style offered only in India. Products that are offered in India are Tandoori Paneer Roll, Chocolate Rossomalai Mousse, Malai Chom Chom Tiramisu, Elaichi Mewa Croissant, Chicken Kathi Roll and Murg Tikka Panini (Tata Starbucks, 2019). They have started a tea brand named as Teavana which offeres 18 different varieties of tea. Also, there one tea that is exclusively sold in India is spice majesty blend.
Starbucks is an American company started in 1971 in Seattle, Washington. They first started as roaster and retailer of whole bean and ground coffee, tea and spices in Seattle’s pike place market. They have over 17,000 locations in 50 countries (Our Company – Starbucks). Starbucks offers variety of coffee and snacks. They have some specialty beverages that they offer seasonally. They also offer pre-packaged cold beverages such as Frappuccino which is the most consumed pre-packaged cold beverage offered by Starbucks. Also, “Starbucks Evenings” locations offer beer, wine and appetizers (Starbucks, 2019).
Starbucks offers varieties of hot and cold beverages. They offer lower calories and sugar free beverages in which they use they use skim milk, they also give option to choose between natural sweeteners and artificial sweeteners or sugar-free syrup flavours (Starbucks, 2019). They sell iced beverages and these are offered in fruit flavours. They have varieties of sizes: Demi (89 ml) smallest size, Short (240 ml) smaller of two original sizes, Mini (300 ml) smaller than three original Frappuccino sizes, Tall (350 ml) larger of two original sizes. They have espresso and cappuccino. The sell tea as “Teavana” in variety of flavours. Not only beverages but Starbucks also offer different snacks and breakfast items. Those who are health conscious they offer protein boxes. They have covered almost all the market segments.
Starbucks target market are the individuals who are willing to pay extra for quality and service of products. They are also targeting more health-conscious customers by offering low calorie beverages. They target students, employees and professionals and both upper and middle class (Starbucks Segmentation, Targeting and Positioning, 2017). Their target market are high income and high spenders, urban-ish and on-the-go, healthy professionals, socially conscious customers, flexible to change (Who is starbucks’ Target Audience, 2019). Starbucks has 52 stores in Africa, 7484 stores in Asia, 1889 stores in Europe, 16309 stores in North America, 57 stores in Australia and New Zealand and 404 stores in South America.
TATA GLOBAL BEVERAGES
Tata Global Beverages is an Indian multinational non-alcoholic beverages company (Tata Global Beverages, 2019). It was in 1964 and its headquartered in Kolkata, West Bengal. It is world’s second largest coffee and tea producer and Asia’s largest coffee and tea producer. It has many subsidiaries brands through which they market tea, these subsidiaries are Tata Tea, Tetley, Good Earth Teas and Eight O’clock. Tata tea is the biggest selling brand in India and Tetley is biggest selling brand in Canada, US and UK. They produce 7 crore kgs of tea in India and they own 54 tea gardens and 10 tea blending and packaging factories (Tata Global Beverages, 2019). They have product and brand presence in more than 50 countries. They also have joint venture with PepsiCo called NourishCo which produces non-carbonated drinks.
The products of Tata Global Beverages are Tetley, Tata Tea, Vitax, Joekels, Good Earth, Jemča and Teapigs (Products, 2019).
TYPE OF ALLIANCE
I think it is a strongly coupled strategic alliance because they have signed a contract for a joint venture and also in their contract they have agreed to promote agronomy practices which includes training for local farmers, technicians and agronomists to improve coffee-growing and milling skills (Tata Coffee & Starbucks sign MoU for Strategic Alliance in India, 2011). In their JV they have decided to pay equal license fee to Starbucks and Tata Global Beverages for using their brands and services (Tatas to get brand royalty from JV with Starbucks, 2012). Starbucks will use one of Tata’s roasting facility in Coorg as a part of agreement and then they will buy other roasting facilities together. Starbucks will buy coffee beans from Tata Coffee estates. This will open the door for Starbucks to enter into the Indian market. In their Sourcing and roasting agreement Tata Coffee will roast and export coffee to Starbucks Coffee Company and Tata Starbucks (Starbucks Stories, 2019). Tata has gained a lot of experience in the retail business which has been helpful for Tata to get more knowledge about the Indian market (Starbucks comes to India, Selling Coffee and Atmosphere, n.d.). One of the major benefits that the Tata is bringing on the table is the number of outlets owned by them and some can be used for the Starbucks (Starbucks comes to India, Selling Coffee and Atmosphere, n.d.).
ADVANTAGES AND DISADVANTAGES
- Starbucks will get roasted coffee from Tata Coffee.
- They don’t have to buy the place for the outlets because it will be provided by Tata as they have different stores in many places and will provide space in their hotels.
- Easy entry into the Indian market.
- It benefited Tata Coffee to gain access to US market by exporting the coffee beans to Starbucks in the US.
- Starbucks gained access to Indian airline industry as they provide coffee on Vistara airline one of India’s fastest growing airline industry.
- Tata will get the brand value of Starbucks.
- Tata will get more in-depth knowledge about different beverages of Starbucks.
- Starbucks will get knowledge about the Indian market trend from Tata Coffee.
- Increased competition in the Indian market.
- Difference in trend and cultural aspects.
- The Indian market is mostly tea-based culture.
- More number of lower income group people cannot afford high priced coffee of Starbucks.
- No frequent visits of Indians in café.
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