India's a notoriously populous country with a growing middle class, and many American companies covet store space there. Starbucks
The Wall Street Journal reported that Starbucks has struck a deal with Tata Group. The Indian conglomerate peddles all kinds of consumer goods, and owns the Eight O'Clock Coffee brand found on U.S. grocery-store shelves. The deal will include Starbucks opening in Tata's locations, including retail outlets and upscale hotels.
For years, Starbucks has tentatively aimed at raising its presence in India. In 2007, it distributed its wares in Indian movie theaters, and in 2009, the coffee giant reiterated plans to get business going in India. A recent logo change led some to speculate that ditching the English word "Starbucks" signaled the company's plans for rising international expansion.
Starbucks would certainly be a natural fit for an Indian market that craves a cup of java. Coffee consumption in the country has risen by 90% since 1998.
American companies have made numerous attempts of varying effectiveness to set up shop in densely populated countries like India and China. Yum! Brands
American companies definitely covet a presence in India and China, but that doesn't mean they can easily adjust to cultural differences. However, if Starbucks can take off in India, the java giant could enjoy supercaffeinated returns. Even if sluggish U.S. consumer spending and increasing rivalry from companies like Green Mountain Coffee Roasters
The coffee giant needs to hurry, though; other food chains and rivals are stepping up their efforts, and Starbucks shareholders won't want to be left behind.
Peet's Coffee & Tea is a Motley Fool Big Short short-sale selection. Green Mountain Coffee Roasters is a Motley Fool Rule Breakers recommendation. Starbucks is a Motley Fool Stock Advisor selection. The Fool owns shares of Yum! Brands. Try any of our Foolish newsletter services free for 30 days.
Alyce Lomax owns shares of Starbucks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.