By Yazhou Sun
Tata Coffee LTD. is looking to finalize a deal with Starbucks Corp. by the end of January, allowing the international coffee chain to finally enter into India, a largely untapped market, with its first store opening in 2012, according to Boston.com.
If the move goes well, India would become as large an opportunity as there exists in the world, coupled with China.
This plan echoes Starbucks’ success in China and failure in Australia. By Oct. 2011, there were already 500 locations in China. The company plans to expand to 1,500 locations in China by 2015, according to Business Wire. However, 61 of 85 Starbucks locations went out of business in Australia in 2006. The only Starbucks remaining were a few in Brisbane, Melbourne and Sydney.
Why didn’t it work out in Australia? The answer is simple: The coffee giant didn’t understand a thriving urban café culture was already in place when it made its Australian debut in 2000.
The secret ingredient of the company’s success is not the coffee, but the culture it’s selling. For a conservative country like China, which has kept barriers to the flow of capital from abroad for so long, the establishment of the café as a social identity seems very tempting, said James Post, corporate strategy professor at the School of Management.
“Tea drinkers dominate India today,” Post said in an email. “But, that can, and probably will, change. Starbucks sells culture: an image, a taste and a brand. Their kiosks and stores are places to meet, socialize and be seen. It is the ‘Starbucks experience.’”
Despite its success in China, Starbucks has received flack for a location in the former Imperial Palace in the centuries-old Forbidden City, which closed in July 2007. The coffee shop had been a source of ongoing controversy since its opening in 2000; protesters felt that the presence of the American chain in this location was an affront to Chinese culture.
Starbucks at the Forbidden City, courtesy of Wikipedia Commons
Despite China’s intermittent disapproval of foreign franchises, journalism professor Lou Ureneck at the College of Communication said this spread of culture will continue.
“Globalization may bring cultural homogenization, but it’s here to stay,” Ureneck said. “The proliferation of choices, tastes, etc. gives people more choices and options. Few of us would say we want ‘less.’ We humans are insatiable consumers of the new and the ‘cool.’”