Starbucks goes desi with masala chai, drip coffee

Starbucks is launching masala chai and filter coffee in India, a world first for the world’s largest coffee chain as it revamps its menu in the country to appeal to consumers with Indianized and more affordable options.

The menu now also includes freshly assembled street sandwiches, milkshakes, bite-sized snacks and a smaller drink cup which is initially being tested in four markets – Bengaluru, Gurgaon, Bhopal and Indore.

“Introducing these things is taking it to the next level. We believe this will help us bring new consumers into our fold. The trigger is to create new opportunities for current consumers and attract more consumers,” said Sushant Dash, CEO of Tata Starbucks, a joint venture that operates Starbucks in India.

The focus on Indianized products and menus for global consumer goods and restaurant chains is not new. For example, McDonald’s sells McAloo Tikki while Domino’s has been offering paneer makhani and chicken tikka pizza for years.

Even Starbucks has chole paneer kulcha and turmeric latte on its menu. So what really triggered the move? Affordability and demand for local and small options, the company said.

“Some of the groceries that we’re launching as a starting point in a Starbucks are becoming more affordable and appealing to a larger segment of consumers,” Dash told ET in an exclusive interaction. “The idea is also to learn, to see consumer acceptance in the markets, to see the nuances, to check and adjust, and then see where it goes.”

Starbucks’ positioning in India is premium compared to rivals Cafe Coffee Day and McCafe, which have significantly lower prices. The US company’s move also comes on the heels of two global rivals – Canadian coffee chain Tim Hortons and British sandwich and coffee chain Pret a Manger – announcing plans to enter India this year. Unlike household essentials and groceries, discretionary segments such as restaurants and lifestyle products have been shielded from the inflation-driven slowdown in consumer demand.

Starbucks, which started operations in India in October 2012, recorded the fastest store expansion in the previous fiscal year, opening a store every week on average. The company also entered eight new cities, bringing the total number of stores to 268, spread across 26 cities in India. The aggressive expansion also led to a 76% increase in sales despite two waves of Covid-19, albeit from a low base.

Experts said expanding the product portfolio and entering new territories will keep fast food chains competitive.

“Companies are aware that consumer tastes are constantly changing and their constant desire for freshness on the menu drives them to keep innovating in their product offerings,” Himanshu Nayyar, principal analyst at Yes Securities, said in a statement. note to investors. “Companies are revamping existing stores, updating product offerings and adding innovative offerings to cater to the tastes of the Indian diaspora and stay competitive.”

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