DELHI: The US giant Starbucks is revamping its strategy to lure Indians and including children, with smaller, cheaper beverages as it looks to expand in towns amid a fierce challenge from domestic startups in one of its fastest-growing markets.
Among the first foreign coffee brands to enter tea-loving India, the United States giant has taken almost 11 years to open 343 stores, in contrast with private equity-backed chains Third Wave and Blue Tokai which opened about 150 in the last three years.
Sushant Dash, the chief executive of Starbucks in India, said “As you grow in size, you need to get the latest consumers,” adding that the chain’s “pricing play” would help shatter a perception that it is expensive.
The industry has launched a six-ounce drink, “Picco”, which starts at 2.24 dollars, and milkshakes for 3.33 dollars as part of its revamp to target affluent Indians who prefer smaller servings.
Starbucks plans to open more small and big stores in smaller towns, said a company source, who spoke on condition of anonymity.
Both its new offerings are unique to India and unavailable in Singapore, China, and the United States.
India’s small but fast-growing speciality tea and coffee cafe market is worth 300 million dollars and is set to grow 12 per cent each year, Euromonitor estimates. Canada’s Tim Hortons and Britain’s Pret A Manger are expanding, but have only a handful of outlets.
“Excessively large portion sizes are an American phenomenon,” said Devangshu Dutta, head of retail consultancy Third Eyesight.
“Indian consumers are value-conscious. If adjusting portion sizes down to what is more normal support makes prices accessible, that’s a double win.”
He was among the analysts who felt the move by Starbucks, operating in India in a joint venture with Tata Group, could further boost its sales, which hit a record 132 million dollars in fiscal 2022/23.
