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Tag: coffee

  • The digital opportunity for Coca Cola at Costa Coffee

    The digital opportunity for Coca Cola at Costa Coffee

    Coca-cola bought Costa Coffee for GBP3.9 billion (US$5.1 billion) recently. As a result of the deal, the US-based fizzy drink company will gain a strong cafe presence across Europe, Africa, the Middle East, and the Asia Pacific.

    So far, Costa has about 2,400 coffee shops in the UK, 1,400 coffee shops in 31 international markets, and more than 8,000 Costa Express self-serve units.

    Why your cash is no good at these bars and coffee shops

    On average, the brand has been in business for more than 40 years and has opened 289 new stores every year. In fact, prior to the deal, Costa was set on establishing a strong presence in China.

    The company also earned GBP1.167 billion (US$1.507 billion) in revenues in 2016. The figure pales in comparison to Starbucks’ revenues of US$22.39 billion (2017) but maybe in a couple of years, Costa might be in a position to lead the market.

    One of the biggest factors that will play to Coca-Cola’s advantage is that innovation is part of Costa’s DNA. “When I came to the business I could see the foundation was strong but we needed to invigorate and innovate. I want us to be famous for innovating,” said Costa MD Dominic Paul last year.

    The company even worked with startups in the UK to prepare itself for the digital world, and build the coffee shop of the future. “We want to build an experience that’s relevant in 2025,” said an executive at one of the company hackathons.

    Highlighting the digital opportunity

    Starbucks has access to plenty of data about its customers and their buying habits, and it does a fabulous job using technology to drive business growth — today.

    Costa Coffee, on the other hand, might not know as much about its customers but with Coca-Cola in the mix, the company has significant opportunities ahead of it.

    Coca-Cola owns brands like fairlife (milk), Dasani (water), Georgia (coffee), Nestea (ice-tea), Cappy (fruit juice) among several others.

    The company understands the beverage market and has data to map seasons, geographies, and other metrics to customer purchases — allowing Costa to enter new markets, draw up ideal customer personas to market to, and even create more targeted advertising.

    In fact, Costa Coffee could even follow in Starbucks’ footsteps and venture into the retail market, all on the strong shoulders of Coca-Cola.

    Here are a few technologies that Coca-Cola uses — that Costa could borrow and benefit from in the future:

    # 1 | AI-driven proof-of-purchase for loyalty program

    One reason why Starbucks has been able to collect mountains of customer data is that they offer a great loyalty program. In fact, since their loyalty program runs on an app, the company is able to send targeted messages and offers as well.

    Costa could ape the loyalty program that Starbucks offers, and it could make it better by incorporating features that award points for the purchase of ready to drink coffee products from supermarkets and retail outlets.

    In order to do so, the company could use the AI solution that Coca-Cola developed in partnership with Google last year — which is now part of most of the campaigns run by the fizzy drink company in the US.

    # 2 | AI-powered vending machine count

    In the digital age, vending machines are a good alternative to retail outlets, especially for the cafe industry.

    A large number of people across the globe wait in a queue every morning, only to take their coffee and bagel ‘to-go’. Having more vending machines could be a good way to solve the problem — especially if they’re stocked frequently.

    However, the problem then would be checking when a machine needs to be refilled. If Costa is to go down this route, it could leverage a solution that Coca-Cola developed in partnership with Salesforce.

    The ERP giant’s AI product had been trained to recognize, identify, and count the varieties and quantities of Coca-Cola bottles stored in one of its cooler display cabinets, simply by analyzing a photo taken with an iPad or iPhone.

    Further, using AI, the system can factor in seasonal variations, weather information, and upcoming promotions, to automatically calculate when the machines need to be restocked.

    # 3 | Big data to determine popular flavors

    Coca-Cola created Cherry Sprite based on data from hundreds of thousands of self-serve soft-drink fountains.

    It has developed strong big data capabilities and understand how to leverage data to determine how to create products that customers prefer.

    Using this knowledge, and data from Coca-Cola’s Georgia and other brands, Costa could create the perfect ready to drink beverages for customers, propelling itself ahead of the competition quite quickly — especially with Coca-Cola’s distribution and supply chain intelligence to support it.

  • Animal cafe trend a concern for wildlife experts in Cambodia

    Animal cafe trend a concern for wildlife experts in Cambodia

    As the trend to keep and display exotic animals in cafes in the Cambodian capital grows in popularity, wildlife experts have warned that the animal trade is largely unregulated and could be putting creatures at risk.

    Reptile Cafe, one of the city’s recent openings, is located on a quiet corner of Street 448 in Phnom Penh. Inside, a few cages filled with iguanas are displayed at the front door. On the left is a cage for a large red parrot, while further in, several other glass enclosures are filled with orange corn snakes, geckos and spiders.

    They are unlikely and unconventional coffee mates, but all of them have been brought into the country to spark the curiosity of customers, according to owner Chea Raty, 32.

    “Seeing the growing market for coffee shops, I had an idea and wanted to open a small cafe and show off the species that I love,” he said. He now has more than ten different species on show, which guests can freely interact with. And he plans to introduce more.

    “As some customers sip their coffee, they’ll see that others dare to hold these animals. And they too would want to try and touch them.”

    None of these animals, however, has proper documentation. Instead, they were registered as pets by the Ministry of Agriculture, Forestry and Fisheries.

    Similar to Raty, Nay Sokhondara, 25, said he started his Zoo Cafe four months ago after seeing the potential of combining coffee and animals.

    The species he keeps in his busy establishment include marmosets, guinea pigs, a chinchilla and a raccoon.

    “Many young people don’t know these animals, so I want to introduce them,” he said.

    Most of them were bought from a farm in Thailand, and some he brought back from Vietnam. He has no formal documents to bring them across the border and admitted to taking a risk in doing so.

    “I have some people there. I know them, so I can trust them. Then sometimes, I paid them also,” Sokhondara said. “I need to spend one day to transfer my pets individually.”

    None of the species, he added, is endangered and he too has registered them as house pets with a five-year licence. His next plan: To source a small kangaroo from Thailand and create a breeding farm.

    Sarah Brook, a technical adviser to Wildlife Conservation Society (WCS), said the trend of exhibiting wild animals is a worrying one.

    “Wild animals do not make good pets, so it not good to encourage this practice,” she said.

    “Even when bred in captivity they need a lot of care, a good diet and an environment similar to their natural habitat, and free of disturbance and stress.

    “I don’t think a cafe in Phnom Penh can provide that.”

    She added that Cambodia needs to take stronger legal action and implement better enforcement to prevent the illegal wildlife trade from thriving.

    “It is a very big problem in this region, for pets, meat, medicines and other products,” she said.

    However, Keo Omaliss, Director of Forestry Administration, played down the concerns and said these types of cases were inconsequential.

    “For Cambodia, I think there is not much cross-border illegal trade of wildlife. It is so little,” he said.

    He said there was no problem with the animals being registered inside Cambodia and put on display in captivity as long as they were not on the endangered species list, and that the purpose was to educate the general public.

    “Whether this activity affects the number of wild animals in the natural forest or not, this is something important we need to focus on. But if their activities are just to make people love animals, it’s a good thing,” he said.

    However, Nick Marx, Wildlife Alliance’s director of wildlife rescue and care, said these animals should be sent back to their natural habitats.

    “Keeping wild animals in small cages is unkind,” said Marx.

    “This kind of practice serves no benefit for conservation. It is clearly for entertainment to attract customers.”

    While Wildlife Alliance is working to combat the illegal trade of Cambodian wildlife within the country, he believed that these particular species were not indigenous to Cambodia and therefore not within his organisation’s jurisdiction to act and confiscate them.

    “It should be the job of the Cambodian government to make sure all these animals are kept properly and all these shop are acting legally.”

  • Indonesian coffee startup Fore Coffee has bagged seed funding

    Indonesian coffee startup Fore Coffee has bagged seed funding

    Fore Coffee’s seed funding will be East Ventures’ third insider-incubated project after EV Hive and Warung Pintar.

    Early-stage venture fund East Ventures has announced today its third incubation, which is Fore Coffee, an on-demand high-quality coffee startup from Indonesia. East Ventures invested seed funding to the company, which aims to make specialty coffee easily available for customers.

    The company is now on its way to opening its second flagship store at Plaza Indonesia in October and is looking to open more branches in both malls and offices. The first outlet is at the second floor of Otten Coffee outlet in the heart of Jakarta.

    “We are leveraging from the network and expertise from our predecessor Otten, and we are equipped with machine and technology to deliver the finest quality coffee to our customer. Our goal is to have the day where everyone has access to affordable specialty coffee close to them every day,” said Robin Boe, CEO of Fore Coffee.

    Wilson Cuaca, Managing Partner of East Ventures, who also becomes the chairman of the startup, added that the country’s vastly growing tech ecosystem has changed the way consumers get their food. Cuaca gave an example of Luckin Coffee in China, which manages to serve a new demand for food consumption with a new bottoms-up startup design

    Fore Coffee started serving its first cup on August 8, 2018, and as of today, is serving 1,000 cups a week.

  • Asian Coffee : Vietnam quiet despite recovery in global prices; Indonesia premiums tighten

    Asian Coffee : Vietnam quiet despite recovery in global prices; Indonesia premiums tighten

    Global coffee prices recovered but markets were subdued in Vietnam and Indonesia due to low stocks in both the countries, traders said.

    In Indonesia’s Lampung province, exporters quoted premiums for the grade 4 defect 80 robusta at $25 to $30 premium a ton to London’s November and December contracts, down from last week’s $50 premium, a trader said.

    Another trader quoted the beans at $70 premiums to November and January contracts.

    “Market prices rose in the past week, we have to cut premiums,” one of the traders said, adding that only a few transactions took place this week due to weaker demand and low stock after Indonesia’s main harvest ended last month.

    Indonesia coffee exports from the province of Lampung in Sumatra in September plunged 51 percent from the same month last year to 10,058 tons, official data showed, with lower production this year and higher domestic demand contributed to the drop in exports.

    “Global buyers have shifted to Vietnam because its cheaper there,” the trader added.

    In Vietnam, exporters have started offering beans from the upcoming harvest since stocks from the past crop were running low, while farmers are still not satisfied with the price despite a recovery in global prices, traders said.

    Farmers in the Central Highlands, Vietnam’s largest coffee growing area, offered coffee at VND34,000-34,400 ($1.46-$1.47) per kg, up from VND32,600-32,800 last week, but still below a 6-year-high level of more than VND47,000 hit last year.

    “The green bean (prices) are too low and the cost is increasing. (In) some countries, the running cost is even higher than the price,” said Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association.

    Regardless, Vietnam in the 2017/2018 crop exported an estimated 1.8 million tons of coffee, up 12.95 percent from the previous crop, while January-September exports grew 19.6 percent annually to 1.46 million tons, government data showed.

    Exporters offered Vietnam’s 5-percent black and broken grade 2 robusta at $30-$40 discount per ton to London’s November and January contracts, same as last week, but importers asked for a larger discount of $50, traders said.

    Extended rains in Vietnam’s coffee growing region have raised concerns about the quality and timing of the upcoming harvest, which could start as early as next month.

    Scattered showers are expected over the next week in the Central Highlands region, the National Centre for Hydro-Meteorological Forecasting agency said on its website.

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  • Vietnamese coffee maker gets an energy boost

    Vietnamese coffee maker gets an energy boost

    Vinacafe Bien Hoa (HoSE: VCF) is placed among the top three instant coffee producers in Vietnam, alongside Trung Nguyen and Nestle.

    After reaching its peak in 2014, however, the company’s coffee segment went through a stiff drop in revenue which was recorded at VND1.7 trillion ($74.6 million) last year, a decline of VND300 billion year-on-year and VND550 billion compared to the record high in 2014.

    Its portion of revenue generated by instant coffee has plummeted from 80 percent to 50 percent.

    This trend is not unique, as revenues of Trung Nguyen, its major rival, have stayed flat in the last three years at around VND3.8 trillion ($166.8 million).

    According to several market research firms, the market share of caffeine drinks is now being eaten up by energy-boosting alternatives to coffee, like energy drinks and bottled tea.

    This trend has helped Vinacafe offset sluggish sales of instant coffee. It introduced the coffee-flavored energy drink under Wake-up brand in 2014. The new product quickly gained popularity in a market dominated by Thailand’s Red Bull, PepsiCo’s Sting and local Number 1.

    Revenue of Wake-up 247 has gone up four-fold in three years. Last year, it was recorded at more than VND1.2 trillion ($52.7 million), an in crease of 55.5 percent from 2016. The gross profit of the energy drink was VND557 billion, corresponding to a gross profit margin of 45.5 percent, higher than the figure of coffee by 12 percentage points.

    Vinacafe has targeted VND3.1-3.3 trillion in revenue this year, a 5 percent year-on-year decline. However, it aims at higher post-tax profit of VND450-500 billion, up 21-35 percent from 2017.

    To achieve these targets, the company will focus on rebuilding its instant coffee brands by relaunching some products with new makeovers. For the energy drink, it seeks to expand production and distribution.

    At the general meeting last April, Nguyen Tan Ky, general director of Vinacafe, said the company has changed its distribution model to secure a two-digit growth rate in face of stiff competition.

    Its products are now sold through a nationwide network of its parent company Masan Beverage, a wholly owned subsidiary of consumer goods giant Masan Consumer under Masan Group.

  • Vietnam’s Coffee King Makes a Public Appearance

    Vietnam’s Coffee King Makes a Public Appearance

    CEO of Trung Nguyen Coffee put in an unannounced appearance and asked company staff to ‘revolutionize’ themselves. The CEO of Vietnam’s top coffee brand, Trung Nguyen, put in a surprise appearance at a company event on Saturday, after “disappearing” for almost five years.

    Dang Le Nguyen Vu, known as the Coffee King of Vietnam, had stayed away from public eye amidst a lengthy divorce process with his wife that is yet to end.

    Vu, who had nurtured Trung Nguyen Coffee and taken it to 60 international markets, amazed participants at the company event by turning up without prior notice.

    “Brothers and sisters, you have to start by revolutionizing yourselves,” he said in a short speech.The CEO exhorted Trung Nguyen’s leaders and staff to do everything differently from other companies in the world.

    Trung Nguyen must aim to become the number one coffee brand in the world, establishing its presence everywhere, he said.

    Vu said he had spent the last five years meditating up in the mountains and now had answers to “all the questions in this world.”

    The unannounced appearance of Vu has gathered a lot of public and media attention, particularly because his wife, Le Hoang Diep Thao, recently accused four leaders of Trung Nguyen Coffee for misusing their power to manipulate her husband’s company while he was away.

    Thao, who owns another coffee brand, King Coffee, said that incorrect information had been spread on social media to slander her husband, who was too sick to appear in public.

    “These leaders did this to manipulate Trung Nguyen for their personal gain,” she said.

    The divorce proceedings between Vu and Thao, who used to be the deputy director of Trung Nguyen, had also caught public attention in 2015, when they took each other to court, each accusing the other of obstructing the company’s operations.

    Vu and Thao have also been embroiled in a lengthy and costly legal battle for years over the ownership of Trung Nguyen Group, which has a charter capital of VND1.5 trillion ($65.8 million).

    Thao was a minority shareholder of the company until Vu ousted her in 2015.

    The court has not officially settled the divorce petition.

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  • Omotesando Koffee Opens First Store in Bangkok

    Omotesando Koffee Opens First Store in Bangkok

    Upscale Tokyo cafe Omotesando Koffee may have closed its original location in Japan – but it survives in other markets and will soon be launched in Bangkok, Thailand.

    The cafe has been signed up by Siam Piwat to take space in Siam Paragon shopping centre, amidst up-market furniture stores on level 3.

    In Tokyo, Omotesando Koffee was renowned for serving espresso-style coffees from a 3m x 3m space inside a Japanese house. It closed in 2015 when the building was demolished.

    Founder Eiichi Kunitomo has opened a new cafe in the same spot (but new building) under the name Koffee Mameya.

    Omotesando Koffee has outlets in Hong Kong and Singapore and another store is planned for the UK after the Bangkok opening.

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  • Vietnamese coffee prices keep dipping

    Vietnamese coffee prices keep dipping

    Coffee prices in the Central Highlands have been decreasing since the beginning of the year, and are not likely to recover any time soon, according to the Ministry of Agriculture and Rural Development.

    The price stands at VND35,100–35,500 ($1.55-1.56) per kilogram, down VND400–600 from the end of last year.

    This is the lowest price in the last two months and Vietnamese farmers are holding on to their stock without selling, a ministry report said.

    It attributed the price to favorable weather in Brazil, the world’s top coffee exporter; and the start of a new season in Indonesia, another major producer and exporter.

    With global supply remaining high, a price rise is unlikely to happen soon.

    However, Vietnam still enjoyed a positive export situation in the first four months of the year, exporting 41,700 tons of coffee worth $161 million, an increase of 23.5 percent in volume and 19.6 percent in value.

    Germany and the U.S. remain the largest markets for Vietnamese coffee, respectively accounting for 13 and 11 percent of total exports, according to the agriculture ministry.

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  • Indonesia’s Coffee Retail Market Shows Lots of Promise

    Indonesia’s Coffee Retail Market Shows Lots of Promise

    Indonesia is one of the world’s biggest coffee retail markets by volume, driven by increasing domestic demand, according to the result of a recent study by global market intelligence agency Mintel, released on Thursday (31/05).

    The United of States, with 607,000 metric tons, is the world’s biggest, followed by Brazil (425,000 tons), Germany (424,000 tons), Japan (304,000 tons) and Indonesia (268,000 tons).

    The research also estimates that the compound annual growth rate in the coffee retail market in Indonesia will likely rise by 11.4 percent between 2017 and 2021, making it the world’s fastest-growing coffee retail market among a list of countries that includes Vietnam, ranked second at 9.2 percent, followed by Turkey (6.8 percent), the Philippines (6.7 percent) and Mexico (6.1 percent).

    “Coffee culture has surged in Asia with more and more specialty coffee houses setting up shop in countries like Japan, Singapore and Indonesia. Big-brand coffee chains are also increasing their expansion efforts in the region,” Jonny Forsyth, associate director at Mintel Food & Drink, said in a statement.

    The number of specialty coffee outlets and chain-store coffee shops in Indonesia has doubled to 1,025 and 1,083 respectively, between 2012 and 2016, with most of the new outlets in Jakarta, according to data compiled by research group Euromonitor.

    Since United States-based coffee giant Starbucks entered Indonesia in 2002, it has expanded to 22 cities with around 240 stores across the archipelago.

    According to data compiled by the International Coffee Organization, coffee consumption in Indonesia, the world’s fourth-largest coffee producer, surged to 276,000 tons in 2016 from only 108,000 tons in 2000.

    The Mintel study also showed strong growth in single-serve coffee in emerging Asian markets, thanks to rapid economic growth and urbanization, unlike more developed countries.

    In an annual report by Mintel released last year, Indonesia was ranked as the world’s fastest-growing consumer of packaged coffee, including instant coffee, ready-to-drink coffee and coffee in pods or capsules, between 2011 and 2016.

    “Asia’s emerging markets have led global coffee growth in years past and will continue with Indonesia leading this charge,” Forsyth said.

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  • Starbucks China believes in a strong future by doubling Shops

    Starbucks China believes in a strong future by doubling Shops

    Starbucks China plans to open a new store every 15 hours for the next five years, doubling its store count to 6000.

    During its first-ever China Investor Conference in Shanghai on Tuesday, the US-headquartered coffee company said it plans to more than triple sales and more than double operating income in China by the end of 2022, compared with last year’s levels.

    At the end of last year, Starbucks China had about 3000 stores. Yesterday the company promised to open 600 annually from this year through to 2022.

    “The power of our brand in China, the strength and momentum in our business, and the world-class Chinese leadership team give me great confidence in our ability to capture the enormous growth opportunities ahead in this dynamic market,” said Kevin Johnson, Starbucks president and CEO. “No Western company or brand is better positioned to evolve with the rapidly expanding Chinese middle class – and we continue to mindfully evolve a coffee culture in China where the reward will be healthy, long-term, profitable growth for decades to come. We are committed to long-term investment in China.”

    Starbucks China’s agenda is to focus on enhancing its coffee-forward approach to elevating the third place (a philosophy in which home and workplace are the first two places and Starbucks is the third, as a preferred leisure space), building deeper customer relationships in digital and extending the Starbucks Experience to the on-the-go and at-home consumers.

    “Starbucks is committed to playing the long game in China and is proud to be an integral part of the local community for nearly 20 years,” said Belinda Wong, Starbucks China CEO.

    “The strong trusted relationships between our partners and customers give me great confidence in our ability to deliver our long-term growth while continuing to make investments in China, for China.”

    Disciplined growth in China

    Starbucks China says its newest generation stores are delivering the highest average unit volumes, return on investment and profitability of any of the market’s prior store classes in its history – “a clear demonstration that customers in China continue to embrace the Starbucks brand”.

    The company has drafted what it terms a “brand roadmap” to deepen coffee knowledge and human connection, “creating a Starbucks Discovery Journey that manifests itself into a unique store development process and respect for local heritage specific to China”.

    This journey starts with locally curated, core store experiences. After opening its first Starbucks Reserve Bar in 2014, it now has more than 150 of them and will reach 200 by the end of this year.

    Beijing Fun flagship

    Next month, the company will open its newest multi-level concept – the Beijing Fun flagship store. Located inside the high-traffic Beijing Fun shopping area, this will be the largest store globally, aside from its Roasteries.

    Starbucks China also plans to expand its in-store experience and drive customer loyalty using apps and other digital platforms, embracing personalisation, mobile ordering and payment services, and home or office delivery.

    During the past four years, the number of active 90-day loyalty members has nearly tripled to almost 7 million – and 90 per cent of members are now actively using the Starbucks app.

    Early last year, the company launched a social media gifting feature “Say it with Starbucks” on WeChat. That has now expanded onto the Alibaba platform.

    More than 60 per cent of transactions in Starbucks China stores are completed with digital payments, with just 20 per cent in cash.

    Ready-to-drink

    Over the next five years, the Starbucks China Ready-to-Drink (RTD) business is expected to expand to more than 400 major Chinese cities across more than 125,000 premium points of distribution in partnership with Tingyi, a leader in China’s RTD beverage category.

    Next month, the company will introduce the Starbucks chilled cup platform with four flavours, launching a new Starbucks category to Chinese consumers.

    “This beverage platform is expected to quickly become a preferred on-the-go format for coffee and tea in China. The chilled cup concept builds on the success of Starbucks Doubleshot RTD beverages, which were introduced last month,” the company said.

    Starbucks China also plans to use the recently announced global coffee alliance with Nestle to provide more at-home options to Chinese consumers.

    “The alliance will enable Starbucks channel development to grow its reach and scale in the single-serve and foodservice businesses, leveraging Nestle’s reach to expand Starbucks consumer packaged goods presence from 28 countries to nearly 190 countries around the world. The alliance will also bring Starbucks Coffee to both the Nespresso and Nescafe Dolce Gusto machine platforms around the world,” said Starbucks.

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  • Nestle to pay billions to obtain Starbucks rights

    Nestle to pay billions to obtain Starbucks rights

    Nestle is to pay Starbucks US$7.1 billion for the global rights to sell and distribute Starbucks products outside cafes. The Starbucks rights deal includes Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA and Torrefazione Italia packaged coffee and tea in all global at-home and away-from-home channels. And the Starbucks brand portfolio will be represented on Nestlé’s single-serve capsule systems, such as the Nespresso machines.

    The Seattle-headquartered cafe giant says the alliance with Nestle will allow it to accelerate and grow the global reach of Starbucks brands in the consumer packaged goods market and in foodservice channels.

    Starbucks will lead in sourcing, roasting and global brand management for the alliance, while the two companies will work closely together on innovation and go-to-market strategies.

    “With a shared commitment to ethical and sustainable sourcing of coffee, this alliance will transform, expand and elevate both the at-home and away-from-home coffee and related categories around the world,” Starbucks said in a statement.

    Neil Saunders, MD of GlobalData Retail, said the scale of the deal underlines the brand strength of Starbucks and of Nestle’s desire to use it to power its own growth.

    “For Starbucks the deal will help to drive brand recognition outside of its core North American and European markets as Nestle ramps up expansion using its distribution capacity. Arguably, it also allows Starbucks to concentrate more fully on developing its retail business, including the higher end concepts like Reserve Roastery that it is currently rolling out.

    “For Nestle, Starbucks gives it a powerful brand it can add to a coffee armoury that is looking a little tarnished. The group has always struggled with market share in North America and this deal essentially buys immediate scale. It also provides numerous opportunities for expansion elsewhere in the world by leveraging the Starbucks brand.”

    Kevin Johnson, president and CEO of Starbucks, said the alliance will take the Starbucks experience into the homes of millions more consumers around the world through the reach and reputation of Nestle.

    “This historic deal is part of our ongoing efforts to focus and evolve our business to meet changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”

    Nestle CEO Mark Schneider said the deal marked a “significant step” for the Swiss headquartered company’s coffee business.

    “With Starbucks, Nescafe and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognised as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world.”

    Saunders observed the deal is yet another example of how large consumer goods companies are struggling to develop and grow their traditional brands.

    “Arguably, Nestle’s preferred vehicles for driving growth in coffee would be its own Nescafe and Nespresso brands. However, these have failed to gain traction in North America and have reached maturity elsewhere. There is a case to be made that Nestle has failed to innovate and develop either brand to the extent it should.”

    Saunders cautioned there may be a downside for Nestle in the deal:

    “There is a risk for Nestle is that while Starbucks is one of the best known and most powerful brands in coffee, others like McDonald’s are looking to cash in on the category by selling their own brand products through supermarkets. A host of innovative small companies, like Bulletproof Coffee and Four Sigmatic, are also making advances into the sector by emphasising the health and wellness benefits of the beverage.

    “Arguably, Nestle has gone with the obvious and easy choice – and paid a lot of money for it. It could, and probably should, also examine at how it could also acquire and develop some more innovative startups,” Saunders concluded.

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  • Costa Coffee takes the cream as Britons wake up to coffee

    Costa Coffee takes the cream as Britons wake up to coffee

    Converting a nation of tea drinkers to coffee will be a tough job. But it has been done before. In 1995, when UK conglomerate Whitbread bought CB Costa Brothers Coffee from Sergio and Bruno Costa, tea was the UK’s favourite hot drink. “At home, people drank instant. If you were lucky, you’d get a filter coffee or a shot from a Rombouts machine in a pub or restaurant,” said Bob Tyrrell, who did extensive market research at the time. Costa had just 41 shops then, turning over £55m. Whitbread thought the market might be worth £600m a year, and paid about £20m for Costa. Two decades later it has more than 2,000 outlets, making it the UK market leader by some distance.

    Total revenue from the country’s 24,000 coffee shops and cafés is estimated by Allegra World Coffee Portal at more than £9bn. This week, Whitbread bowed to pressure from two activist investors and confirmed it would demerge Costa from its other activities — but not before it has set the company up for a big push into China, another country with a long tradition of tea-drinking. Costa aims to have total annual sales of £2.5bn by 2020, with a third of them coming from overseas. Drinking good coffee became a preoccupation of the connoisseur British consumer of the late 1990s. “It wasn’t so much keeping up with the Joneses as keeping away from them.

    People wanted to consume things they could talk about,” said Mr Tyrrell. Other factors were at work, too: disposable incomes were growing, low-cost airlines meant more people were experiencing “proper” coffee in mainland Europe and workers were starting to abandon breakfast in favour of food on the go.

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  • Starbucks Plans To Step Up Digital Marketing Efforts

    Starbucks Plans To Step Up Digital Marketing Efforts

    The coffee chain added 1.6 million new U.S. members to its Starbucks rewards program. In addition, Starbucks discovered that members of Starbucks rewards were buying more: Over the quarter, their spend increased to 39 percent of U.S. company-operated sales.

    Beyond its loyalty program, Starbucks noted that customers were taking advantage of opportunities to skip the counter: Mobile Order & Pay represented 12 percent of U.S. company-operated transactions during the quarter.

    Overall, Starbucks also saw growth in comparable store sales in both the U.S. and abroad. Global comparable store sales rose by 2 percent, essentially in line with analysts’ estimates of 1.9 percent. Americas and U.S. comp store sales also increased 2 percent, while China comp store sales rose at the slightly higher rate of 4 percent.

    In terms of financials, Starbucks reported better-than-expected sales: The coffee chain beat revenue estimates by $100 million, with revenues of $6 billion, and met analysts’ earnings estimates at $0.53 per share. Starbucks President and CEO Kevin Johnson said the company reported solid results for the quarter.

    “Starbucks Q2 of fiscal 2018 represented another quarter of record financial results, highlighted by accelerating momentum across our Americas business — particularly in the U.S. — continued strong performance in China and our strongest comp growth in Japan in five quarters,” Johnson said in a press release.

    Digital Expansion

    One of Starbucks’ key priorities is to expand its digital interactions with customers.

    “Establishing digital relationships with many more customers represents a significant growth opportunity, as we have proven that a direct communications channel combined with personalization enhances the customer experience and drives customer engagement,” Johnson said during the call.

    To expand its digital relationships, Starbucks is implementing new ways to attract digitally registered customers beyond the rewards program. For example, the coffee chain is offering its Mobile Order & Pay to all customers and leveraging Wi-Fi sign-ins at its brick-and-mortar stores. In addition, Starbucks is reinventing Frappuccino Happy Hour through the use of single-use digital coupons. Johnson said these efforts are already yielding results and will generate a few million more registered users by the year’s end.

    This difference is driving a shift in Starbucks’ marketing strategy. In the past, Starbucks has offered a drumbeat of promotional offers that have not necessarily led to sustained sales. For example, the company offered a Frappuccino Happy Hour to all of its customers over a short period of time. But that strategy didn’t work: The deal didn’t improve sales of other drinks in 2017. The promotion saw “a lower-than-expected lift in non-discounted Frappuccino beverages following Happy Hour,” Chief Financial Officer Scott Maw explained on a July 2017 conference call.

    As a result, the company is taking a new approach. Starbucks’ updated program will sign customers up for direct digital relationships and promote a variety of beverages throughout the year. In essence, the goal behind the shift is to transition from a short-term, one-and-done approach for promotions to more sustained marketing efforts. Through this strategy, the company is expanding its digital reach beyond its loyal rewards members to connect with as many non-rewards customers as possible. Starbucks can now personalize its communications to customers while also gaining direct access to them.

    China Expansion

    Starbucks already has 3,200 company-operated stores in 141 cities across Mainland China, but the coffee chain anticipates a larger potential market there.

    “The opportunities for Starbucks in China, which are significant, are growing along with the size and scale of our business,” Johnson said on the call.

    To that end, the company is holding a China Investor Tour. Of course, the company is no stranger to China: It’s been in the Chinese market for 20 years. According to Johnson, the middle-class population in China stands around 600 million people, which could provide an expanded market for the company.

    “No Western company or brand is better positioned to benefit from the rapidly expanding Chinese middle class than Starbucks,” Johnson said.

  • Phuc Long makes it debut in Danang

    Phuc Long makes it debut in Danang

    Vietnamese coffee and tea chain Phuc Long has opened its first Danang outlet.

    Located on the second floor of Lotte Mart, the new Phuc Long Danang store drew long queues on opening day, as it offered three days of launch promotional activity. From today until Sunday, customers who come early and check-in on Facebook will get free vouchers and coffee mugs.

    Phuc Long has partnered with Grab to offer discount for rides to its store – for both GrabBike and GrabCar.

    The second Phuc Long Danang outlet will open soon on Nguyen Van Linh.

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  • Gloria Jeans to expand with 40 stores in Germany

    Gloria Jeans to expand with 40 stores in Germany

    A local scandal hasn’t dampened Retail Food Group’s international ambitions, with the franchise giant announcing that its troubled Gloria Jeans brand will expand into Germany.

    A 10-year master franchise agreement has been signed with a group of local businessmen who are slated to open 40 Gloria Jeans outlets in Germany over the next five years.

    The deal follows a slate Master Franchise Agreements signed by RFG across the Donut King and Crust Pizza Gourmet Pizza brands in recent months as it looks to diversify its operations outside of Australia.

    Gloria Jeans already has master franchise deals in the Czech Republic, Poland and Romania but Germany will considerably bolster its presence outside of eastern-Europe.

    The first German Gloria Jeans store will be in Cologne and will open by the middle of this year.

    Retail Food Group has been embarking on a modernization plan for the coffee brand recently, unveiling new store concepts to try and excite shoppers after sales from its beverages division struggled to gain traction last year.

    RFG’s chief executive of international Mike Gilbert said Europe was an important market for the business and that Gloria Jeans was positioned for success in Germany.

    “Germany has a growing speciality coffee market and Gloria Jean’s Coffees has an outstanding offering to meet that need. It’s an offering that is already very successful with close to 900 outlets throughout the world,” he said.

    “Retail Food Group is actively marketing our brands in Europe and see this region as a key part of our international growth strategy.”

    International has been one of the few bright spots for RFG in recent months as it navigates slowing trading and the fall-out from media reports that its business model is treating franchisees poorly.

    In March the business booked a $87.8 million half-year loss, flagging the closure of up to 200 stores of its thousand-plus stores.

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