Based in Seattle,
) recently announced that India will see its first Starbucks store
in the Horniman Circle area of Mumbai, by the end of October 2012.
The store will be owned and operated by Tata Starbucks Limited, a
50/50 joint venture between Starbucks Corporation and Tata Global
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According to the agreement with Tata Global Beverages Limited, the
store will use high quality coffee produced and roasted in India.
The store will offer the same ambience and high quality espresso
that Starbucks stores are known for. The joint venture is expected
to promote the brand identity of the Indian-grown arabica coffee in
the global market.
India is one of the fastest growing markets with a large consumer
base and increasing consumer spending. With the growing numbers in
the middle income group, India has a huge potential for growth in
the confectionery and beverage market.
As a leading retailer of specialty coffee in the global market,
Starbucks believes that global expansion is necessary for long-term
growth. The company intends to capitalize on the growth
opportunities in the Indian market. In fiscal 2013, the company
intends to open 1,200 stores in the global market, out of which 500
stores are to be opened in the China-Asia-Pacific (CAP) region..
On the other hand, this joint venture is an extension of Tata
Global Beverages' strategy of expanding through joint ventures.
Starbucks carries a Zacks #3 Rank in the near term (Hold rating).
We have a Neutral recommendation on the company.
We appreciate Starbucks' strong market position, new product
launches, rapid growth in China as well as a solid turnaround in
its U.S. business. However, Starbucks' results in the third quarter
of 2012 have been weaker than expected, due to soft consumer
traffic trends in the U.S. in June and a weakening global consumer
environment. Further, poor sales in Europe due to depressed
macroeconomic conditions concern us.