Coffee culture thrives in Middle East

Coffee consumption in the Middle East, as well as in other parts of the world, has proven to be more than just the need to quench the thirst for caffeine. A Euromonitor International survey has suggested that the regional coffee industry continues to thrive despite the recent economic downturn, which saw most consumers cutting back costs on non-basic commodities.

Michael Schaefer, consumer food service analyst at Euromonitor, says the Middle East coffee sector, including that of the North African region, is now a multi-million dollar industry that has not shown any let up in its annual growth performance.

“The expansion of the coffee sector in the Middle East is truly a region-wide phenomenon – Egypt and Saudi Arabia alone accounted for $120 million (Dh440m) in spending through modern coffee shops in 2009, while markets like Lebanon, Kuwait and the UAE are all witnessing booming expansion,” he wrote in a report.

Schaefer added that since 2004, overall coffee consumption in the region has posted steady increase with UAE growing by a massive 85 per cent, Morocco and Saudi Arabia by over 30 per cent and Egypt by a healthy 20 per cent. The figures, he said, indicate a “strong demand for both at-home and on-the-go coffee drinking opportunities.”

The Euromonitor analyst added that while coffee consumption and the presence of coffee shops are not new to the region, it has evolved into a more socially-oriented business that attracts people of various age, gender and cultural background.

“There is no question that the modern coffee shop sector represents something new, providing a social outlet for women, students and other young people in stark contrast to the male-dominated traditional café sector. Particularly in more conservative markets like Saudi Arabia, where alcoholic drinks are banned and social opportunities of any kind are limited, coffee shops have emerged as a major nighttime gathering place,” he said.

Caffeine-sipping young consumers key to success

The Euromonitor study focused on the region’s surging young demographics – in the GCC, for instance, where the median age is 26 – as one of the factors driving the coffee industry to post significant revenues.

“One of the key drivers behind [the coffee industry’s] expansion is a soaring youth population – students and young people are a key demographic for coffee chains the world over, and many of the Middle East’s most important markets boast very young populations indeed,” says Schaefer.

Saudi Arabia, one of the largest markets in the Gulf region, enjoys a population of 15 million consumers under the age of 30, while Egypt is home to over 45 million consumers under the age of 30 years old, according to Euromonitor statistics.

These brand-savvy young consumers, the report noted, have been key to transforming coffee shops into a place to socialise. Consequently, coffee shops have also transformed their recipes to cater to their “hip” clientele in the region by offering a wide array of hot and cold concoctions.

Starbucks, for instance, sells over 30 blends of coffee, espresso, blended drinks, teas and the Frappuccino range. According to the chain’s spokesperson, they currently offer a whopping list of 87,000 beverage combinations, which include low fat/skimmed milk and decaf, and different types of milk, syrups and sugar.

Region attracts international coffee chains

With its huge client base, the Middle East has become a favourite destination for globally-recognised coffee brands such as US giant Starbucks, UK’s Costa Coffee and Canada’s Second Cup, to name a few.

In an earlier interview with Alrroya.com, a Starbucks spokesperson for the Middle East region, said the coffee chain has been operating 300 stores in Kuwait, Saudi Arabia, UAE, Egypt, Lebanon, Jordan, Qatar, Oman and Bahrain. About 90 of these stores are located in the UAE – 60 of which are based in Dubai.

Despite their already strong presence in the region, the spokesperson said Starbucks is still looking for new locations in vibrant communities.

“We are comfortable with our performance and growth plans in the region. Last year we opened over 26 stores across the Middle East region, with 17 stores in UAE alone, and we believe there is plenty of potential for more new stores. We see a significant growth opportunity in the UAE, and across the region, and we continue to invest in the market,” the Starbucks spokesperson said.

In addition to these international brands, Schaefer said local operators have contributed to the vibrancy of the coffee business in the region.

“Multiple local chains continue to hold their own—Egypt's Cilantro [which caters to the high-end market], for instance, now operates 56 branches there, more than Starbucks and Costa combined, while in Saudi Arabia a number of local [stores] enjoy a brisk business,” he said.

Fierce competition, Schaefer mentioned, has “helped fuel an accelerating process of segmentation, as chains look to differentiate their offerings.”