Quality is becoming the watchword in the local market
More South Africans than ever are getting their coffee rush from premium coffee.
Even restaurants at which price is a crucial selling feature have introduced premium coffee products.
Wimpy introduced premium coffee in 2006. They now account for 18percent of all its coffee sales.
Kevin Hedderwick, the chief operating officer of Famous Brands, which owns Wimpy, Steers, Debonairs Pizza, House of Coffees and Brazilian, said the market is extremely fragmented.
“Successful coffee operations are all about relationships. Operators have to know their customers — almost by name.”
He said Wimpy’s premium coffee was introduced to protect the brand’s turf in coffee.
“There’s no question but that the South African consumer is gravitating towards premium blends. Coffee is no longer only instant coffee.”
Mugg & Bean, one of the biggest sellers of restaurant coffee in the country, sells about 140tons of coffee a year.
Ben Filmalter, the founder and chairman of Mugg & Bean, said the company could not survive on coffee sales alone.
“Coffee sales account for only about 8percent of the company’s revenue,” he said.
“The Starbucks model, where they derive about 80percent to 90percent of their revenue from coffee, isn’t reasonable for a market like ours.”
Filmalter defines “premium” in terms of the origin of the coffee beans — mostly freshly ground and from regions known for growing Arabica.
“Input costs to produce a cappuccino are the same all round the world.
“At Mugg & Bean, we’re selling a premium cup of coffee for about R12.
“At Starbucks, you’d probably be paying about R25. Their margins are so much greater.”
“The increasing price of milk is becoming an increasingly big factor.
Filmalter said consumption of premium coffee continues to rise.
“Our statistics show movement from filter coffee to bean-to-cup, espresso-type coffee,” he said.
Nyasha Mugadza, BP’s national convenience manager, the force behind the rapid growth of the Wild Bean Cafe, said the coffee industry is in great shape.
Mugadza said: “Our figures show that consumers are gravitating towards premium coffee.
“The value of coffee sales in South Africa has increased by almost 140percent since 2001 and sales of premium coffee are rising in excess of 20percent a year.”
Recent surveys have found that tea is increasingly losing consumers to coffee. Almost three quarters of consumers prefer coffee to tea.
Grant Dutton, managing director of niche coffee outlet Vida e Caffe, said: “Growth has been fast. Of our 29 shops, 15 are new.
“But we are not going to grow at the same rate this year,” he warned.
Dutton said the South African market has a limited capacity for absorbing premium products.
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