TATA STARBUCKS JOINT VENTURE

PRAKASH KUMAR TANOJ PANDEY DEEPAK SHAH ANAND SINGH

- 23 - 31 - 40 - 44

RONEY RODRIGUES - 36

COUNTRY & COMPANY COMPETITIVENESS IN TATA STARBUCKS JOINT VENTURE RONEY RODRIGUES ROLL NO. 36 Starbucks Corp, the world's largest coffee shop company, will open its first cafe in India in August through an equal joint venture with Tata Global Beverages, the two partners said on Monday. The venture, Tata Starbucks Ltd, will spend 400 crore initially and open 50 Starbucks cafe across the country by the end of the calendar year. The initial stores planned in Delhi and Mumbai in August. The move is part of the $10-billion-plus US firm's strategy to focus on emerging markets such as India and China to drive future growth rates. With a 50-50 joint venture with Tata Global Beverages, the world's biggest cafe chain wants to teach Indians a thing or two about good coffee. India is fast developing a taste for good coffee. We'd like to believe we were among the first companies to spot the potential in fact, four years in advance, says White, an Australian coffeemaker that competes with Starbucks globally.

White claims he isn't threatened by Starbucks' India debut: Competition is not bad. Starbucks will expand the reach of high quality coffee. Gloria Jean's doesn't mind more coffee lovers. Starbucks arrival in India may put the countrys coffee market on the map, but Indians growing taste for coffee has been years in the making. In coffee-producing southern India, coffee has long trumped tea as the drink of choice, but the industry has thrived on exports, rather than cultivating and deepening local consumption. Over the past decade, coffee consumption in the country has almost doubled. Coffee chains have sprouted nationwide from urban centers to highway rest stops. One thousand of them have opened in just the past 5 years a number expected to grow five times over the next several years catering to a coffee-drinking market that is growing by 25% each year.

With so much up for grabs, major global cafe brands have been queuing up for their share. Be it the Austrian Testa Rossa, California-based The Coffee Bean & Tea Leaf, or the Italian Lavazza, which opened the first Lavazza Espression in November last year. India is a unique market and we have gone through big transformation since the last four years," said John Culver, president at Starbucks China and Asia Pacific.

While the core deal would be between Starbucks and Tata Global Beverages, it will work with other Tata Group firms such as Tata Coffee and Taj Catering. For instance, Tata plans to sell its mineral water brand Himalayan at Starbucks outlets in markets outside India. And the venture will leverage group firms' properties for setting up Starbucks outlets. The deal comes a year after the Seattle-based firm signed an deal to buy green coffee beans from Tata Coffee's Coorg facility and explore opening retail shops in the country. Starbucks manages over 17,000 stores in more than 57 countries and sells a wide variety of coffee and tea products along with food items, primarily through retail stores. The coffee industry is on an expansion spree, led by market leader Cafe Coffee Day, to cash in on their increasing popularity among young consumers who have more disposable income than their previous generations. Tata Coffee, part of a diversified group, has signed a MOU with Starbucks in 2011for sourcing and roasting coffee beans in the Indian firms somewhere in Karnataka. The entry of Starbucks which has over 16000 stores in more than 50 countries will give competition to existing Indian coffee retail chains like CCDs and Barista.

Starbucks SWOT Analysis and Strategy-Tactics ANAND SINGH ROLL NO. 44 SWOT Analysis Strengths 1. Starbucks is the leading retailer and roaster for brand specialty coffee in the world. 2. Strong brand image with the motto The Starbucks Experience. 3. Starbucks is a global organization with more than 16.000 retails in 48 countries in the entire world. 4. One of the strongest franchises in the world with more than 6500 licenses shops in the world. 5. Starbucks is known for providing superior products and services. 6. Starbucks offered both functional and emotional benefits. 7. Starbucks is number 7 on Fortune Magazine's "100 Best Companies to Work For" for 2008. 8. Have loyal customers in all of Starbucks existing countries. 9. High quality control in all Starbucks retails. 10. Have a consistent high quality of service. 11. Sophisticated atmosphere typical of the Italian Coffee houses, music, interior design and artwork. 12. Outlets positioned in high street locations, malls, within other businesses areas like offices building. 13. Wi-Fi Internet service in all of Starbucks retails. 14. Fast coffee serving. 15. The process of preparing the product does not need highly sophisticated technology.

16. Have a lot of flavors variation. 17. Limited number of strong competitors. 18. High market share and market growth. 19. Always aim to help support environment, ex: by using recyclable tissue. 20. Always treat the employees as a partner not just as employees. 21. Welcome all questions, comments and feedback where customers could send it by email, sms or just inform it in Starbucks retails. 22. Have a Starbucks Workers Union which helps employees to inform their thoughts to management. Weaknesses 1. High pricing which cost not all kind of market could buy Starbucks products. 2. Starbucks considered American Global which cost sentimental issue for customers in some countries. 3. Too focus on US domestic market. 4. Starbucks refuses to guarantee that milk, beverages, chocolate, ice cream, and baked goods sold in the companys stores are free of genetically-modified ingredients. 5. Because of its perfectness of employees service, some employees complaints about the management which push them to always be perfect. That is why they make Starbucks Workers Union.

Opportunities 1. The potential employees are educated people which make it easier to train them. 2. Customer is not price sensitive. 3. Could be able to change negative image of coffee into positive one. 4. High consumerism in Indonesia. 5. Easier to penetrate market because what it sells is the fulfillment of self esteem and need to be love or to belong to community which is the major reason why peoples buy a product. 6. Strong financial support. 7. High growth of economy and market in Indonesia, especially in urban areas. 8. The democratic economy policies in Indonesia make it easier for Starbucks to expand their business. 9. Peoples in Indonesia positioned Starbucks places as one of the best meeting point. 10. Could diverse their product not only in coffee. 11. Many of Starbucks coffee are using organic beans.

12. Some of Starbucks beans are harvested in Indonesia island of Sumatra and Sulawesi. Starbucks purchasing high quality beans in these island at premium prices to help farmers to support their families and invest in a sustainable production. Starbucks paid an average price of $1.20 per pound against the commodity average price of $0.40-0.50 per pound Threats 1. Global financial crisis which make peoples tend not to spend too much money. 2. Low income in Indonesia makes it hard for Starbucks to penetrate more market segmentation. 3. Sentimental issue to the bad effect of coffee from society. 4. Some people believes that Starbucks turning the world into a giant corporate generic mess. 5. Critics said that it exploits farm workers in third countries. 6. It said that Starbucks domination driving small cafes out of business. 7. Issues stated that Starbucks exploit their workers by paying a very minimum wage with a very high standard of work they need to fulfill. 8. Threats of substitute products and services include other drink items such as colas, teas or juices that are sold in retails. Strategy and Tactics for Starbucks Strategy Strategy for Starbucks in Indonesia for the next 1 year that we proposed is to make a campaign called Starbucks for health. This campaign will focus on the health benefits that peoples will get from drinking a cup of Starbucks. We will change people

perception about coffee into positive one and cooperate with other companies in Indonesia to show our support in people health. The fact is that coffee actually one of the healthiest beverages billions of people consume regularly. The average of 300mg coffee with exercise increase energy by 20% and decrease fatigue level while burning fat increased 107% greater than without caffeine. This can be happened because coffee contains hydroxycitric acid and chromium that can increase up to 30% in metabolic rate. It might guard against gout, diabetes and Alzheimer's disease. Studies has shown positive results that compare consumption with diabetes rates, including reports that suggest people who drink two cups a day were 50 percent less likely to develop diabetes and also has been proven by doctors. The trouble comes when people start adding sugar and cream to their coffee, or even worse, buying thick, blended drinks with whipped cream on top. Coffee when consumed in excess can be very addictive, stimulate, and a mood charger. A large amount of coffee or caffeine consumed all at once can have a negative effect on blood. Too much coffee over time can stain peoples health. We believe that this negative perception of coffee could be a threat to Starbucks. But we also see this as an opportunity when we can actually change people behavior in Indonesia to consume healthy coffee and make it as part of their life.

Tactics
Product: We will create a new flavor of Dark Coffee with Fruits topping. This coffee can also be added with skim milk. Dark coffee is the best coffee for health considered it has not been mixed with full cream milk, whipped cream, etc. Fruits topping in this product is a real fruit, not blended with the coffee but just a complementary to add more vitamin while drinking the coffee. For people who want to add milk in it, we will just add skim milk because it contains low fat rather than full cream milk which contains fat for body. This product will provide a free one fruit topping. But if people want to add more than one topping, they could by add Rp 5.000, - for each coffee. The size of the product is the usual size of Starbucks cup where a white cup for hot drinks and a transparent cup for cold drinks. This tactic will be launch and develop for one year and continue to be one of Starbucks flavor for years after. Price: The price for this product is Rp 29.500, - for tall size, Rp 34.500, - for grande size and Rp 39.500, - for venti size. Place: To support Starbucks for Health Campaign, more places will be a 24 hours Starbucks retails where Starbucks will also open 10 retails per year. This will be a convenience to customers where they can decide what time they would like to drink a hot or cold Starbucks coffee. Places that will be open for 24 hours are

Starbucks Kemang Village, Citywalk, Rest area in Karawaci Freeway and Summarecon Serpong. This will support some of Starbucks 24 hours store in EX and Sarinah. This tactic will start immediately and finish in 2 months. Promotion: To communicate the message of healthy coffee we will use: 1. Advertising Advertising for Starbucks will be done by advertising in magazines and newspapers. This will be conduct by one advertising per month. Another kind of advertising is by creating roll banner in retails. The message of the advertising is to communicate the benefits of drinking a cup of coffee in daily life. The banner will be displayed for the first 3 months and there will be a change in design and displayed for another 3 months and continuously for one year.

TATA FOOD AND BEVERAGES SWOT PRAKASH KUMAR ROLL NO. 23 Tata Global Beverages Ltd (TGB), the joint venture between Pepsico India and Tata Tea, plans to enter into the global food industry with a range of healthy food products. Tata Tea was initially a plantation company that evolved into a beverage manufacturer and which signed a joint venture agreement with PepsiCo India. The agreement was originally to market health drinks under the Tata Global beverages brand, but it now hopes to leverage PepsiCo's distribution channels to market food. Tata Group chairman Ratan Tata, speaking at the company's AGM yesterday, said the company expects operating profits to grow EBITDA levels by 15% year-on-year, and TGB brands would be present in over 100 countries by 2015. In addition to India, Tata has plans to enter the USA, South America and Russia with food and beverage products. Ratan Tata has announced his retirement as Group chairman by end 2012 when he turns 75 and his successor is expected to be announced by March next year Tata coffee Vision Tata Coffee will strive to be the preferred choice in the premium markets. Customer centricity, quality, sustainability and an engaged workforce will be our drivers to achieve a Rs.1,000 crore enterprise by 2015. Tata Coffee shall be perceived as one of the most respected organisations in the plantation and extraction business.

Mission To continuously enhance value to stakeholders through our operations while preserving and enhancing the ecological wealth entrusted to us. Improving the quality of life of our people. Be an exemplary corporate citizen upholding Tata values with total commitment to the communities in which we operate. Values Integrity Understanding Excellence Unity Responsibility Quality Policy Our policy is to achieve customer delight through excellence in quality in all our products, processes and services to emerge as a leading player. Climate Change Policy We will play a leadership role in climate change by being knowledgeable, responsive and trustworthy, and by adopting environment-friendly technologies, business practices and innovation, while pursuing our own growth aspirations and the enhancement of shareholder value We will measure our carbon footprint and will strive to: Be the benchmark in our industry segment on carbon footprint,

for our plants and operations. Engage actively in climate change advocacy and the shaping of regulations in different business sectors. Incorporate a green perspective in all our key organisational processes. Environment Policy We are committed to preserving and enriching the environment by optimal use of resources and adopting green processes. Strategy of Tata Aiming to be the good for you global leader Tata Global Beverages is a business with rich traditions and big ambition. As a consolidated group we are already the secondlargest tea company in the world, were on a journey to become the global leader in branded good for you beverages. We have a big ambition Were growing fast focusing on disruptive innovation thats changing the way consumers enjoy beverages, by growing our brands and investing in new and exciting opportunities to expand our business. We have come along way Weve already come a long way from domestic Indian tea grower to global business in less than 10 years. Over 90% of our current sales from branded products and 70 per cent of our Group turnover is generated outside India. Going global Were building a truly global business with 65% of the consolidated revenues come from markets outside India, new corporate headquarters in London, a single Executive Office to coordinate our key functions and five Regional Presidents running our consumer-facing businesses. Were working hard to build a shared company culture and align every one of our 3,000 employees behind a clear strategy to deliver sustainable success.

Our strategy Our strategy focuses on product innovation, building global brands, success in new channels and more countries, plus greater efficiency. Brands were building key global brands, including Tetley and Tata Tea, plus exciting new regional brands such as Tetley Infusions, T4KIDZ and Good Earth Products and disruptive innovation were challenging and changing the way customers think about beverages and enjoy them Sustainability were aiming for long-term success, so sustainability makes business sense. Weve identified four key issues to drive us forward: Ethical Sourcing, Climate Change, Packaging and Water. Process our new global information systems will help us improve efficiency and share knowledge, today and in future Distribution weve moving into new markets and new channels to become truly global People thanks to our simplified global management system, emerging culture and talent strategy, were making Tata Global Beverages the place to be Brands overview Please select a brand above for more information Our brands are our most valuable assets and we are cherishing them, nurturing them and ultimately aim to grow them. Were on a mission to make the world a better place through lifeenhancing sustainable hydration. Weve got the brands we need to do it and the distribution channels to meet global demand. With a fantastic portfolio of brands and products that we are intensely passionate about, we delight millions of consumers across the world with great tasting beverages every single day. Tetley Tetley is enjoyed in 70 countries worldwide and is the second largest tea brand globally thanks to its commitment to innovating and being relevant to the consumer. For all these reasons it is also market leader in Canada. In the UK, Tetley is the brand

leader in Decaffeinated tea, and Tetley Redbush is the fastestgrowing green tea brand. Recent innovations include the launch of Extra Strong in the UK, Infusions (a liquid Real Brew tea mix for water) in Canada, and the very latest new product Chai Latte in Australia. This is a combination of tea and coffee which is low in caffeine but high in taste! Tata Tea Tata Tea is officially a superbrand in India, enjoying almost legendary status in the country. It is the volume leader and the second-most trusted hot beverage brand, thanks to great regional brands including Kannan Devan, Chakra Gold, Agni, Gemini and Tata Tea Gold. But its not just about tea. The company also promotes social awakening and action through its landmark Jaago Re marketing campaigns. This year Tata Tea Celebrates its 25th year, a fact that Indian consumers cant fail to have noticed as it has been widely publicised. Heres to the next 25 years! Good Earth Good Earth has gone from strength to strength since its inception as a herbal and speciality tea business on the US west coast. It produces a wide range of premium teas of exceptional flavour, based on top quality ingredients, and has a strong commitment to sustainability, producing a 100% GM free range. Eight OClock Coffee Renowned for "brewing memories for generations" Eight O'clock Coffee was recently named one of America's greatest brands. The 4th largest coffee brand by volume in the US, the brand has recently increased its relevance to consumers even further with eye-catching new packaging. Himalayan Himalayans Live Natural brand philosophy and unique packaging makes it a premium lifestyle mineral water brand in India. The brand enjoys an aspirational equity among consumers

and has the potential of truly becoming an international and iconic brand and the recent re-launch has further strengthened its brand equity. Grand Grand is one of Russia's leading beverage brands, known for its great value coffee and tea products, offering refinement. Grand coffee has recently been relaunched with new packaging and a new advertising campaign highlighting the brands Charming Aroma. Vitax Vitax is a well-established and recognised brand in Poland, where consumers choose it for its originally flavoured fruit and herbal teas, all blended with great care using high quality ingredients. The brand is currently building affinity with consumers through a new vitality themed advertising campaign. Tata Coffee Tata Coffee is one of the worlds largest integrated coffee businesses. It has a hand in every aspect of the coffee making process, starting with the growing and curing of coffee and tea to the manufacturing and marketing of its premium coffee brands. It is a significant contributor towards the growth and development of Indian coffee. . ACTIVATE The exciting and innovative California-based brand ACTIVATE uses a unique and patented design in which vitamins and nutrients are stored as powder in a chamber inside the cap which are released into water when the cap is twisted. The brand has recently launched their first-ever traditional marketing activity - a double-decker bus signage and health club ads with bounce-back coupons driving consumers to locations where Activate is sold.

Coffee industry in India TANOJ PANDEY ROLL NO. 31

The coffee industry in India is the sixth largest producer of coffee in the world, accounting for over four percent of world coffee production, with the bulk of all production taking place in its Southern states. India is most noted for its Monsooned Malabar variety. It is believed that coffee has been cultivated in India longer than anywhere outside of the Arabian Peninsula. The caf culture was brought into this country by Caf Coffee Day, the Chikmanglur based brand which opened the first caf in 1996. Since then it has established 1250 outlets with 150 outlets operating out of Bangalore itself. Add Baristas 200 and Costa Coffees 70 along with new entrants like Aromas, and you are looking at 2000 crore market with 1500 cafs. Now thats quite a big market, isnt it? And obviously despite all the regulations in FDI, Starbucks couldnt sign off this country for long. In the US, Starbucks is like their Caf Coffee Day present at every nook and corner. But in India, they have already indicated that they would initially start their operations by sourcing coffee beans from Tata Coffees plantations and set up shop in Tata run Taj Hotels. A good idea obviously because of the high end premium positioning they have in the minds of the Indian consumers. There are over 171,000 coffee farms in India, cultivating nearly 900,000 acres of coffee trees. Most coffee production in India is on small farms, with over 90 percent of all farms consisting of 10 acres or fewer. However, such farms account for just over half of all land used for coffee production and a minority of all coffee

produced .Most coffee in India is grown in three states: Karnataka, Kerala, and Tamilnadu. These states accounted for over 92 percent of India's coffee production in the 2005-2006 growing season. India exported over 440,000 pounds of coffee in the 2008-2009 season, slightly less than in 2007 and nearly 5 percent less than 2005. Over a quarter of the India's coffee exports go to Italy. Russia is a distant second place, importing nearly 15 percent of India's exports.

Starbucks and Tata Coffee, a part of the Tata conglomerate, officially announced their partnership to source premium coffee beans in a non-binding memorandum of understanding earlier this year. Additionally, the agreement will explore the potential for future development of the Starbucks brand in retail spaces owned by Tata in India, with the first outlet likely to open this summer. Related reports have also suggested that the partnership may form into a joint venture within which Starbucks will hold 51 percent equity share within a year. The traditionally tea-drinking society of India has been steadily increasing its coffee intake as the young and middle-class aspire to have more Western tastes. Group networking is embracing the practice of meetings over coffee as professional and recreational clubs alike gather routinely at coffee shops in Indias major cities to discuss business and pleasure. The Indian market is now home to multiple coffee brands including Caf Coffee Day, Barista Lavazza, Java Green, Costa Coffee, and Gloria Jeans Coffee, but the market is still young. Though India is the sixth largest coffee producer in the world with an annual output of 300,000 tons (4 percent share of global production), it consumes only 100,000 tons a year a relatively tiny volume for a population of 1.2

billion. As market estimates predict at least 100 million new coffees. Drinkers are to emerge in India in the near future; the potential for more international and domestic entry into the industry is high. The government did allow 100% foreign investment in singlebrand retail. Until now, single-brand foreign retailers such as Nike Inc. could hold only 51% of an Indian joint venture. Starbucks is classified as a hospitality business rather than a retailer and was allowed to have 100% ownership in India prior to the new policy for single-brand retail. Analysts said Starbucks arrival will be viewed positively by other foreign brands that may have become skeptical about India's prospects. Starbucks had been looking for a partner in India since about 2007 .A few years ago; India's Gross Domestic Product was seeing almost doubledigit growth. The government expects GDP for the year ending March 31 to come in at around 7% and few economists think it'll do much better in the coming year.

Conclusion Barista and Caf Coffee Day have established themselves a great deal in this sector as they were the first movers. This has happened so much so that the customers have become used to staying at a caf more for its ambience rather than the product as CCD says A lot can happen over coffee. But then the high end coffee chains like Costa which is one of Starbucks strongest competitors in the UK is planning to increase its number of stores to about 120 by end of 2011. Having an average day sales of Rs. 24,000, it seems to be positioned for strong future growth. Even though Aromas from Australia has also entered this segment, CCD and Barista are tough competition for them.

In such a situation, the question remains on how Starbucks would go about differentiating itself in such a scenario. The fact that India as a country is so vast and everyone has equal opportunities should make sure that they would necessarily carve a niche for themselves. Their quality, style and sense of service would definitely improve the caf culture in the country.

INDIA INTERNATIONAL BUSINESS POINT OF VIEW DEEPAK SHAH ROLL NO. 40 Indias growing economy and its billion-plus population means theres plenty of room for Starbucks and others. How exactly Starbucks will cater its products to the Indian market, which has different tastes in coffee and food remains to be seen. Bringing concepts to countries like this, theres a lot of work that has to go into figuring how to modify it without changing the brand. As the Coffee Bean & Tea Leaf inches toward closing time, Starbucks certainly seems cool to the youth. Starbucks arrival in India may put the countrys coffee market on the map, but Indians growing taste for coffee has been years in the making. In coffee-producing southern India, coffee has long trumped tea as the drink of choice, but the industry has thrived on exports, rather than cultivating and deepening local consumption. Over the past decade, coffee consumption in the country has almost doubled. Traditionally drinkers of tea, Indians have of late been taking to ordering espressos and cappuccino at quick-service cafes as a growing middle class increasingly adapts to Western tastes. As a result, overall domestic consumption of coffee rose to an estimated 108,000 metric tons in 2010, up 80% in the past decade, according to government figures.Foreign food companies apart from coffee brands are also noticing a growing propensity among India's middle class to eat out and spend on beverages and processed foods.

But Starbucks is optimistic about the Indian market, with Chairman Howard Schultz saying in January that the country could one day rival China, where the company plans to more than triple the number of its outlets to about 1,500 in five years. While shares in Tata Coffee might be outperforming amid expectations of long-term orders to supply to Starbucks operations in India, it is too early to quantify the benefits to the Indian company. India's restrictive foreign-ownership laws could prove to be a challenge for Starbucks. Local foreign-investment rules limit a foreign single-brand retailer to holding 51% of its joint venture with a local partner.The first India Starbucks locations are scheduled to open in August in New Delhi and Mumbai.With an initial investment of around $80 million, the Tata-Starbucks partnership is expected to open 50 stores in the country in 2012. The locations will be branded Starbucks Coffee A Tata Alliance.

India remains one of the big untapped markets for Seattle-based Starbucks, and the company's expected entry comes at a time of growing popularity of coffee outlets in the country.