80 per cent growth of coffee business predicted in UAE alone, by Euromonitor International from the year 2009 to 2014, has led to the emergence of Middle East as one of the fastest growing coffee markets in the world. Read on..
Coffee has always played a special role in Middle Eastern culture. The Arabian Peninsula was, after all, one of the first places in the world to discover coffee. However Middle East’s coffee market has undergone a transformation during the past few years and there is a growth of convenient coffee culture. The coffee market no doubt continues to grown-up for new tastes and textures in the region. Presently, Middle East is one of the fastest growing coffee markets in the world, and the region has become a lucrative market for international coffee exporters as well.
Coffee trends
The coffee drinking habits are different across the region, with Arabic coffee being the preferred beverage of choice in the Gulf, while Turkish coffee is very popular in the Levant.
Elaborating on coffee culture in Middle East Ms Dolly Kaur, Director, Cafe Oz, a unit of Newport Coffee Co (India) Pvt. Ltd, says: “Coffee has been discovered in the northeast region of Ethiopia, and the cultivation of coffee first expanded in the Arab world. Coffee is a very important part of Arabic culture. You can find almost all big brands of coffee industry present in these countries. According to me 40 per cent of the industry is shared by local unorganised players with sheesha.” Recently, international coffee tastes have found footing in the region and an espresso coffee culture has flourished. Big international coffee brands and outlets have flocked to the region and have quickly expanded their operations in the region.
Coffee brands expanding in Middle East
Coffee has become an integral part of the Arab world and the international as well as national brands aim to provide Middle East, the best blend that they have developed over the years and enjoyed by the people across the globe. There are a lot of international coffee brands that are readily making efforts to re-define the concept of coffee making and drinking in the Middle East. At present there are more than 4,000 coffee and tea houses catering to 65 per cent of the beverage consumption in the UAE. The coffee purchases are expected to rise 80 per cent by 2014. As a result Emirates is considered the region's top coffee and tea markets.
Coffee Planet a home grown brand in Middle East has over 150 locations made up of self-service vending machines as well as Cafes, Kiosks and Carts which are all owned. In Oman the brand has over 30 self service machines and retail outlets and 20 self service machines and two Cafes are under construction in Malaysia. Pakistan has their first Coffee Planet café under construction. Coffee Planet’s preferred method of expansion is via franchising which they started since 2009. At present the brand has opened in Oman, Malaysia and soon Qatar, Saudi Arabia, Pakistan, Russia & Ukraine.
Robert Jones, Business Development Director, Coffee Planet informs: “We started the company in 2005 in the UAE and worked for a number of years to dominate a number of markets. In 2009 we opened our first roastery and at the beginning of 2011 we upgrade to a much larger facility in the Jebel Ali Freezone making us the largest premium coffee roastery in the middle east. We operate in markets such as self-service, retail outlets, HORECA foodservice supply, distribution as well as private label contract roasting.”He further discloses, “We are continually looking for franchise partners around the world who want to be a part of something different.”
Having considered the growing numbers of coffee consumption many international brands are planning to launch their outlets in Middle East. One such brand is Café Oz and Bar. Elaborating on brand’s expansion in Middle east Kaur informs: “Café Oz, does not have its presence in Middle East, but soon it will be entering in to the market through franchise module.”
Singapore’s leading f&b group Food Empire Holdings, food and beverage is all set to further strengthen its coffee brands in the UAE and across the Middle East and Africa region. Klassno and Maccoffee, the two leading coffee brands from Food Empire, are currently available across the region. Food Empire’s sales grew in all the Group’s key regions including the Middle East. Klassno is offering instant cappuccinos, in five distinct flavours : Irish Cream, Mocha, Gold, Latte and Traditional. Klassno also offers coffee mix with and without sugar, hot chocolate mix, non dairy creamer in addition to agglomerated and freeze dried coffee in jars. Another brand looking forward to expand in UAE is C House coffee chain. The chain is set to open its first shop December 2011. The United Company for Engineering (UCECC), a company headquartered in Syria, is the Master Franchisee for C House in UAE and will oversee the launch in Abu Dhabi.
Besides these there is lot of other brands like Gloria Jeans Costa Coffee; Coffee Bean and Tea Leaf; Barista; Starbucks that are present in Middle East.
Franchisee need to have
The eligibility to own a coffee franchise brand though varies from brand and brand. There are still some common parameters that an aspiring entrepreneur needs to have. Dolly informs, “We welcome franchise partners who are passionate about providing quality Food and Beverage. We require our franchisees to invest within the range of Rs 35 to 42 lakh with a minimum built-up area of 1,000 sq. ft.”
Highlighting the parameters to own a franchise of Coffee Planet, Jones specifies: “We look for partners who are capable to invest in outlets as well as have liquidity on top to ensure that the partner is not reliant on the revenues generated on the first store to use to invest in future stores. We have strict eligibility criteria to ensure that not only that our partners are right for our brand but also that we are right for our partners. In terms of space, we have specifically developed retail outlet formats of varying sizes to allow options for our partners for available locations.”
Training and support
The best thing about franchising is the initial hand holding provided by the franchise brands. That is why franchising is called a risk proof business concept. Elaborating on training and support provided by the brand Kaur says: “Our aim is to help the franchise succeed both qualitatively and financially. For this, we provide a comprehensive support system. Assistance will be provided across various areas such as: a) Property selection and Market Survey b) Recruitment & Training c) Marketing Guidance d) Menu Engineering e) Systems and Quality Control.”
Also Jones informs, “We provide full training and support at Coffee Planet HQ as well a full set of systematic manuals to aid our partner development. Our support is continuous and as new systems and processes are developed and refined so they are passed on to our partners to help them improve in their efficiencies.”
Challenges
No doubt Middle East is emerging as favoured destination for international and national brands for expansion but the market is still not free from challenges. From home grown business companies the major challenges as per Jones are: “Very little support for SME companies from financial institutions especially being a home-grown UAE company.” This made the first few years very difficult as a privately owned business as asset finance or trade finance was unavailable until the businesses had survived the first three years with full accounts. Another challenge in the market is the lack of regulation around the coffee industry and so the process of certification generally takes a great deal of time.
Future aspirations
The increasing scientific confirmation on the benefits of coffee and tea on health of people living in Middle East are giving a great push driving already strong sales in the region in the industry. As result of this consumer loyalty and recognition of health value, coffee and tea have emerged as Middle East's best-selling commodities. Here is your opportunity to cash in on this lucrative franchise concept of coffee franchising.
