MENA Region: Buzzing with Caffeine

Coffee drinking is an integral part of every facet of life in the Middle East and North Africa (MENA) region. It is a part of the daily habits and traditions of the population. In Egypt, cafés are public meeting places where people gather to drink coffee or tea and discuss their matters. In Turkey, the rapid expansion of specialist coffee shops is boosting the performance of cafés. Furthermore, the market growth in the UAE is strong due to the surging number of tourists.

World coffee production

World coffee production for 2016/17 is forecast to rise 2.4 million bags from the previous year to 155.7 million bags (60 kilograms) as record Arabica output in Brazil more than offsets lower Robusta production in Brazil, Vietnam, and Indonesia, according to a recent report by USDA. As a result, world Arabica output is expected to rebound to 60 percent of total production after being below this level the previous 5 years. Global consumption is forecast at a record 150.8 million bags, drawing ending inventories to a 4-year low. World exports are expected to slip from last year’s record primarily due to lower shipments from Indonesia, Vietnam, and Brazil.

Cafés perform well in Egypt

Due to the important and traditional role of cafés as public meeting places in Egyptian society, cafés continue to perform well in the country, according to a recent report by Euromonitor. Cafés were the consumer foodservice category with the highest number of customers in Egypt, although this does not always translate into high numbers of transactions due to the traditional role of Egypt’s coffee houses as public meeting places where people sit for long periods of time but don’t necessarily eat or drink a lot. Cafés in Egypt remain a highly fragmented channel in which high numbers of independent players operate. Overall, the leading company in the channel in 2015 was Egyptian Co for International Touristic Projects with a 1 percent value share. The company is the local franchisee for the Costa Coffee and Grand Café chains in Egypt and it has thus been able to benefit from the high levels of consumer recognition that each of these brands enjoys in the country. Cafés were expected to increase in value at a CAGR of 4 percent at constant 2015 prices over the forecast period (2015-2020), with much of this growth set to be driven by the ongoing expansion of modern chained outlets.

“Cafés in Egypt remain a highly fragmented channel in which high numbers of independent players operate”

 

Cafés set to increase in Turkey

In 2015, the increasing popularity of specialist coffee shops and the rapid expansion of these outlets continued to have a positive impact on the performance of cafés, according to Euromonitor. Consequently, cafés registered current value growth of 6 percent. Yasar Dondurma ve Gida AS continued to lead cafés with a total value share of 7 percent in 2015. The company enjoys strong brand awareness through its Mado Café brand, and it has strong penetration within strategic areas in cities. The company also successfully follows current consumer trends, which has helped further consolidate its leading position within cafés. For example, in 2015 the company launched its sugar-free ice cream products which target consumers who are becoming increasingly aware of their health and wellness. Over the forecast period (2015-2020), the growing working population, an increasing number of students, and an increasing number of shopping malls should continue to have a positive impact on cafés. Additionally, the expected outlet expansion and possible new entries into the category should also positively impact the performance of cafés over the next few years. Consequently, cafés are set to increase at a constant 2015 value CAGR of 1 percent over the forecast period.

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Chained specialist coffee shops lead in the UAE

The United Arab Emirates continued to see a surge in the number of inbound tourist arrivals in 2015, the report added, with an impressive increase of 19 percent, while there also continued to be a rise in the number of expatriate workers. This supported strong growth in many areas of cafés. While specialist coffee shops accounts for a fairly small share of overall value sales in cafés at 10 percent in 2015, this channel dominates chained sales in the channel. Chained specialist coffee shops accounted for 64 percent of overall chained value sales in cafés in the year, with the leading brands in this channel thus leading overall sales. M H Alshaya‘s Starbucks leads, followed by Emirate Leisure Retail‘s Costa Coffee, Al Sayer’s Caribou Coffee and Brook Foods’ Gloria Jean’s Coffees. Many consumers enjoy socializing in specialist coffee shops but prefer the reassurance of visiting trusted brands in this channel.

Fatima Saab
Content Editor & Researcher
CPH World Media