Will folks in a tea drinking land like India pay Starbucks prices? Upscale coffee shops in big cities charge about $1 to $2. These cafes cater to the growing middle class who don't mind paying a few extra bucks for Western-style coffee houses with music and wi-fi.
Ricky Barua, an environmental activist, believes that the market is already saturated with existing brands like home-grown and hugely popular Cafe Coffee Day as well as Barrista, which is owned by Lavazza- Italy's biggest coffee makers.
"Lets see what happens," said Barua. "Starbucks will have to offer something extra to woo the Indian customer."
Burwa, however, enjoys a cup at U.K.-based Costa Coffee.
The 50-50 joint venture between Starbucks Coffee Company and Tata Global Beverages Ltd., the second largest branded tea company in the world, was announced on Monday.
"We look forward to bringing the Starbucks experience to customers in India by offering high quality Arabica coffee, handcrafted beverages, locally relevant food and legendary service," said John Culver, Starbucks chief for Asia Pacific.
The new cafes will be called Starbucks Coffee "A Tata Alliance." Tata is one of India's largest business house with a wide-range of pursuits from steel to vehicles. "It opens up exciting business opportunities and new formats for Tata Global Beverages. Starbucks brings unique retail expertise as well as a shared sense of business values," said R.K. Krishnakumar, a top executive of the Indian company.
As part of their collaboration, the two companies will also offer an expensive tea called Tata Tazzo.
The two companies also agreed to.use coffee grown and roasted by Tata in Starbucks outlet in India and abroad.
Tata stock prices went up by over 10 percent after the announcement.