Starbucks India is costlier than Sarbucks USA
Big Mac Index tells that most Indian speciality coffee brands over-price their coffee.
The price of Big Mac and Maharaja Mac can help you price an American product for the Indian market. Difference between the prices of the two burgers, helps in understanding purchase power parity (PPP). Therefore, Apple priced its Apple Music INR 120, and not INR 700 ($10).
As per The Economist: A Big Mac costs INR 183 in India and US$5.74 in the United States. The implied exchange rate is 31.88. The difference between this and the actual exchange rate, 68.55, suggests the Indian rupee is 53.5% undervalued.
Starbucks’ tall cappuccino in New York City costs $3.25. As per the Big Mac index, it should be priced at INR 104 (3.25*32). Instead, Starbucks India sells tall cappuccino for INR 225. It is over priced by INR 121. Blue Tokai sells a cup of cappuccino for INR 170, which is over priced by INR 66. Bizibean sells a cup of cappuccino for INR 95, which is underpriced by INR 6.
As per the purchasing power parity Indian businesses should price their products and services as per the Big Mac Index’s implied exchange rate . However, if they are importing the product or the services, then the pricing will differ. Businesses can also find out if they are over paying for the products and services they buy.