He smiles as his baristas tell him he’s put too much foam in the latte he’s brewing. He’s graduated from a green apron (beginner) to a black apron after a six-month immersion program, but he’s ready to admit he has a lot to learn.
“This is an iconic brand, and it's a brand that is founded on this idea of human connection. It is a brand that is founded on the idea that even in a polarised world, you have the ability to create a third place -- a place where people can come and feel belonging and feel joy, and essentially advance the conversation forward, with the ability to converse, to connect,” he explains as he switches from barista-mode to CEO-mode and sits down to chat about his plans for the company.
The barista role is one he plays with exuberance once a month, getting his hands dirty at a different store every time. “Our life is in these stores. It's with these partners. It's why I work. And so it's important to keep that going and to stay really connected to the team,” he says. It’s these 460,000 partnerships – like Starbucks’ 10-year-old partnership with the Tata Group -- he’s banking on to accelerate growth over the next 50 years. His ‘Triple Shot Reinvention’ strategy revolves around this.
“What it does is it gives us growth of 5% in the long term, double-digit revenue growth, and earnings growth in the 50% plus range. All that put together helps us in a creative financial result. While doing so, we meet the needs of all the stakeholders: we have partners, customers, the farmers and coffee, the community, as well as the environment,” he says. Starbucks’ India business has already crossed the ₹1,000 crore revenue milestone through just 390 stores.
Ramping up this store count is definitely on the agenda, and it’s an aggressive agenda. “I'm really excited by India and what is happening here… the country is poised for take-off. If you look at last year, we opened one store every five days; we're now moving to one store every three days,” he says. But Narasimhan wants more. His question: “What are we now doing for the other two days?”
The answer: a deeper and wider offering, products designed to cater to Indian taste buds and Indian aspirations, and taking the taste and flavours of India to the rest of the world. “We're working on things that are accessible, the Picco price point, and the filter coffee. And so all that's just for India,” he says, and with a smile adds, “We're going to have, early this year here in India, the Starbucks Reserve Monsooned Malabar. That's a tremendous plan. I bragged about it actually the other day: this is going to be in all US stores in the middle of the year.”
Narasimhan is adamant that high-growth, under-penetrated markets like India will be the third stool the company sits pretty on, and he’s in for the long haul. “We have a very long-term view to investments and returns. What we know we're doing is we're creating a third leg of the stool in our global markets… We will invest and you can expect in India that we will invest.”
This will dovetail with his plans to make India’s contribution to the iconic American brand’s global growth more meaningful. While the USA still contributes the lion’s share of Starbucks’ revenues, China, at a little less than 10% is growing. But Narasimhan wants more from the 86 other markets the Starbucks Siren has begun to be heard and seen in.
“You have got to recognise the potential of the headroom we have in all of them as we build out this third leg of the stool. In terms of stores, India is at about 400 stores, but we have 38,000 stores globally. Our plan is to get to 55,000 stores over the course of the next five years, with three out of the four stores being outside of the US -- India will also have a big role in this,” he says.
(Edited by : Shweta Mungre)
First Published: Jan 9, 2024 12:00 PM IST
Redefining Starbuck's Legacy, one cup at a time: Global CEO Laxman Narasimhan whips up an ambitious brew for I - CNBCTV18
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