It is important for all BRIC countries to learn the power of branding. The importance of value addition and branding is so largely applicable that the value of the company largely lies in its products and brand value. Recently Tata Tea and Beverages has moved out of plantation and started building brands by acquiring Tetley and focussing on productising and branding their own tea and other beverage products.

 

Arab Times reports

When Starbucks opened in Brazil a year ago, the US giant knew it would be tough selling coffee in the world’s biggest producer of its raw material ‘caffeine beans.’

What it didn’t bank on was how bittersweet its path to success would be — nor how much more its appeal would rely on its perceived snob value than on the quality of its espressos, lattes, Frappuccinos or cakes.

Last month, the Seattle-based chain opened its seventh store in Sao Paulo, Brazil’s biggest city that still features a few of the extravagant mansions of the 19th-century coffee barons who built the foundations of its wealth today.

The high prices of the brews on offer — a basic cup of coffee costs six reals (3.40 dollars), three times more than in normal Brazilian cafes — have done nothing to shorten the long lines at the counters.

Quite the contrary: monied Brazilians flocking to Starbucks see the stores almost as exclusive clubs for the privileged in a country where displays of wealth are usually an invitation to being mugged.

‘The social level of people here is pretty high,’ said one customer, Monica Korosue, a 28-year-old technology consultant sipping out of a cardboard Starbucks cup in the newest outlet in the chic Jardim Paulista neighborhood.

She agreed with her husband, 34-year-old Mauricio Silva, that Starbucks’ recipe for success in Brazil was in creating ‘a refuge for the elite.’

She said the market appeal of the stores in Brazil reflected ‘valuing American culture.’

But Buck Hendrix, Starbucks’ manager for Latin America, attacked the widely held perception of the company as a US icon.

‘It’s not an American thing. It’s a Starbucks thing, that transcends culture,’ he told AFP in a telephone interview from his office in Miami.

He also shrugged off the elitist tag for the Brazil stores, preferring to describe them as commuter stopovers carefully designed to be ‘warm, comforting, welcoming.’

That secure cosiness was Starbucks’ real contribution to Brazil’s already well-served cafe scene, he said.

‘Brazil knows more about coffee than any other country in the world,’ he said. ‘We think we have a lot to learn from Brazilians about coffee.’

Instead, the piped music, the comfy chairs, wi-fi and — perhaps most importantly — the uniformed guard at the door to prevent robberies of the patrons were all key to making what Hendrix dubbed a ‘third-place environment’ between home and work.

Credit for Starbucks’ success in Brazil was put squarely with Maria Luisa Rodenbeck, a dynamic 49-year-old executive who aggressively presented the business plan to the chain several years ago and who went on to become the company’s Brazilian partner.

Unfortunately, Rodenbeck died early last month when the taxi she was riding in collided with a bus in her native Rio de Janeiro.

Hendrix, who had to take up the reins for a time afterwards, said ‘her death was a devastating blow’ for the Brazil operation.

However, ‘despite her tragic death our plans have not changed in Brazil’. In fact, he said, her demise ‘in some way motivates our expansion.’

Rodenbeck’s husband, Peter Rodenbeck, who brought McDonald’s to Brazil in the 1970s, in an equally talented operator who is now ‘leading the business on a day-to-day basis,’ Hendrix said.

Starbucks has two more outlets under construction in Sao Paulo and is looking to expand into Rio in the next year or two, the company said.

The roll-out is part of a move into Latin America that Starbucks has been executing since saturating the US market.

The region now counts 250 of the company’s 15,000 stores worldwide. More than half are in Mexico, with the others in the Bahamas, Puerto Rico, Chile and Brazil. Another 100 are to be built in the next two years, including in Buenos Aires.

The publicly listed company declined to give financial figures for its Brazil operation. Worldwide, it had revenues of 7.8 billion dollars last year and earnings of 564 million dollars, according to its annual report.

Hendrix said the Brazilian stores had an average of 500 customers per day and were among the best-performing outlets in the Latin American region.

He also said that, although a Brazilian coffee blend was used in one of the espressos on offer in Brazil, its beans were roasted and prepared in the United States along with the other product lines.

Just one block down from the new Starbucks store, the 22-year-old manager of a working class Sao Paulo cafe, Lee Batista da Silva, rubbished the US chain.

‘We’re better than Starbucks because we’re cheaper,’ he boasted as he kicked away three pigeons pecking on the floor of his establishment under a humming fan.

‘Everybody likes coming here because we all know each other — there are a lot of regulars,’ he added, before heading off to chat with a group of customers.