This post is about the New York Times article, "After a Year of Delays, the First Starbucks is to Open in Tea-Loving India this Fall." This article discusses some of the pros and cons of Stabucks' desicion to bring their franchise to India. Although I am not an expert in international coffe franchises, this article posed some interesting insight in the topic of microeconomic advantages and disadvantages involving the supply and demand curves related to the products these cafe franchises sell. The topics this article can be related to for demand are taste, market size, and price of related goods.
Regarding taste, in the Unites States, it seems that Starbucks primarily focuses on coffee and coffee like products. But, as stated in the article, India is primarily a country of tea drinkers whose current population prefers "cold sweet milkshakes, teas and other beverages to traditional coffee." This would make one think that in order for starbuck to increase the demand for their products they would primarily focus on these types of drinks.
The second thing affecting demand in India is the market size. According to this article, India has "experienced an explosion in cafes and restaurants over the last decade because of its growing middle class and a large youth population." This increase in market size would push the demand curve for cafe products to the right, and would make this a good time for Starbucks to open stores in India.
A third and final aspect of demand touched upon by this article is the price of related goods. It appears that Starbucks will be attempting to reach a different market than most of its soon to be competitors in India. But, will this approach work? Although India's market is growing it still may not be growing enough to purchase products from Starbucks. A cafe chain in India called Cafe Coffee Day typically sells a cappuccino for roughly one dollar. The real question is that will the quantity demanded for "premium" coffee, tea, and food be enough for this franchise to thrive in a new market.
Overall, Starbuck's decision to move stores to India seems justified as long as they shift to a more India friendly menu, get in the market soon before the supply grows to meet the increasing demand, and possibly sell a less expensive product.
