Much has been made about Starbucks' (Nasdaq: SBUX) expansion into huge markets like China and India, but the coffee giant postponed its entry into India this past summer when it couldn't gain regulatory approval. Undeterred, it appears that Starbucks is taking another route into the populous country -- by distributing products through an Indian multiplex chain.
According to India's Financial Express, through a deal with PVR Ltd., Starbucks products will be available at several theaters in Mumbai and New Delhi. If that sounds strange, it gets a bit stranger still: The hot, brewed, personalized coffee selections the company is known for will be nowhere to be found. PVR will stock Starbucks products like cold bottled coffee and water. While the deal could eventually extend to 25 theaters in major metropolitan areas in India, the article said PVR is still evaluating how much demand there will be, and therefore there's no set timeframe for any additional rollouts in other venues.
I nominatedMotley Fool Stock Advisor pick Starbucks for our Best Stocks for 2008 contest, since the stock certainly does look inexpensive these days. I figure fears about competitive pressures from McDonald's (NYSE: MCD), Peet's (Nasdaq: PEET), and Caribou (Nasdaq: CBOU) have become overblown, and Starbucks' planned expansion overseas also holds the promise of continued growth.
Then again, I've never deluded myself that it's always easy for American companies to expand into other countries and cultures. Obviously, India has already proven to be a challenge. And a recent retreat involving Starbucks' cafe in China's Forbidden City insinuates that Starbucks may not necessarily be welcome at all times, in all places.
Our own movie industry may struggle with theater attendance, but India's appears to be robust. According to the Indian government's Central Board of Film Certification website, every three months, an audience the size of India's entire population goes to the movies. That said, even if Starbucks' distribution through movie theaters without cafes in operation might sound a bit bizarre, maybe it's actually a creative way to give the brand some buzz ahead of Indian store openings. It's funny, though. Starbucks may have gotten into movies, but now it appears to be getting in through the movies. Admittedly, this is a tiny step into India, Let's hope this entertaining subplot to the Starbucks international expansion story has a happy ending.
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