More bang for Starbucks, India

Global brands across a wide swathe of industries, from automobiles to luxury goods, are betting on the Indian consumer pivoting from price to value consciousness. The top strata of consumers has, indeed, made the transition, which is reflected in altered buyer preference for all manner of goods, from SUVs to iPhones. The transition makes India an interesting market for brands seeking to eke out extra growth in Asia, principally beyond its export powerhouses. India has not delivered similar growth in incomes compared to that during the hyper-growth stages of Japan, South Korea or China. Its curve is flatter, but steadier. And it is the frontline geography for market expansion.

This becomes abundantly evident in the market for affordable luxury represented by Starbucks. The coffee retailer has been around in a nation of tea-drinkers for a while, and has derived adequate traction to place India at the centre of its plans for future growth, as envisaged in an ET interview by Starbucks CEO Laxman Narasimhan this week. The brewmeister intends to roll out nationwide, mapping the rise in disposable incomes and consumption. The premiumisation of a commoditised experience – a third place between office and home – serves as a marker for the geographical spread of India’s middle-classes. Starbucks’ pace of network expansion will also measure how rapidly value sensitivity is rising among Indian consumers.

This should not be difficult for a brand that has, as part of its DNA, redefined the consumer experience. Starbucks is a case study of how to unanchor prices and maintain exceptional customer connect. Brand loyalty in India on a par with what Starbucks has achieved globally will be yet another marker for value consciousness. This makes the job easier for other brands trying to get their value proposition right in India. The messaging improves by adapting to local taste, which Starbucks has internalised through its customised menu for India. Masala chai and filter coffee tell this story, even as frappuccino fills the air with a strong international aroma.