US-based Starbucks, the world’s largest coffeehouse company, is set to open its shops in sub-Saharan Africa for the first time, bringing it into the spiritual home of one of the world’s most popular—and valuable—beverages.
Overseas stores constitute almost one third of all its more than 21,500 outlets, but it is only now that it will sell in the continent outside of North Africa, despite coffee tracing its heritage to the Ethiopian plateau over 1,000 years ago.
Starbucks has partnered with Taste Holdings Ltd for openings starting early next year, in a deal that sent shares of the Johannesburg-based franchiser to a four-year high.
“Starbucks is very excited to sell coffee for the first time in some of the same places in Africa where it sources it,” Taste Chief Executive Officer Carlo Gonzaga told Bloomberg news agency in an interview.
The coffee giant is targeting the continent’s middle class households, classified as those who consume between $15-$115 a day, and who are expected to reach 40 million by 2030, from 15 million currently.
Taste Holdings will start out with South Africa, and has the license to operate the shops for as many as 25 years, plus rights to open in some other African countries, but the executive did not specify which ones.
Starbucks currently sources coffee from nine African countries including Ethiopia, Rwanda, Tanzania, Uganda, Zambia, Cameroon, Burundi, Democratic Republic of Congo and Kenya.
Mail & Guardian Africa dug up some facts and numbers about coffee in Africa.
1: The billion-dollar global beverage that is coffee traces its runaway success to the Ethiopian highlands, which the legend of Kaldi the goatherd called home. Kaldi is said to have discovered coffee after he noticed that his goats, on eating berries from a certain tree, became so energetic that they just wouldn’t sleep at night. On chomping some, he became just as spirited, and reported his observation to the local monastery. The monks, on making a drink from the berries, found they prayed much longer, and the drink soon spread gradually into Arabia, where it was jealously treated as an elite indulgence.
2: The legend is believable—Ethiopia’s coffee primarily comes from tree forests growing in the wild, including from a province called Kaffa, which many say gave the berry its name. Despite an 11% decline from its 2011 peak, the country is Africa’s largest producer, producing 6.6 million bags in the 2014/15 crop year, according to the International Coffee Organisation. This was nearly a third of the continent’s total output. The next four African coffee “superpowers” are Uganda, Ivory Coast, Tanzania and Kenya.
Coffee is held in high regard in Ethiopia
3: The adage holds that coffee is more valuable for African countries when it leaves its home, than when it stays behind. African producers grow the crop primarily for export—what is known as green coffee. Rwanda last year exported 99.6% of its production, Burundi 99.3%, Togo 98% and Tanzania 95%, the same as Uganda.
4: Such export numbers tend to create a high dependence on the crop. According to the Food and Agricultural Organisation, green coffee accounts for 83% of Burundi’s agricultural exports, 69% of Ethiopia’s and Uganda’s, 60% in Rwanda, 42% in Kenya and 83% in Benin.
5: On the other side of the coin are the countries that consume domestically most of their production: Nigeria consumes all of its 40,000 bags, suggesting a huge unmet need for investors, as does the Republic of Congo, even though it grew only 3,000 bags. Angola drinks 85% of its 35,000 bags. But it terms of sheer market it’s Ethiopia, with its 90 million people drinking 55%, or 3.7 million bags of coffee grown. Notable is the DR Congo, which consumes 200,000 bags, or 60% of its production. Madagascar also has a local culture, with 88% of its 467,000 bags consumed in house.
6: With the rise of the middle class come new markets. In a list dominated by Muslim-majority countries, which have traditionally had a deep love affair with the beverage, Algeria imported 2.1 million bags in 2013, well ahead of Sudan at 660,000 bags. Morocco, Egypt and Libya also had significant imports due to their non-existent production. But of non-Muslim majority countries, South Africa, Starbucks first stop, brought in 545,000 bags in 2013, well ahead of Mozambique, Swaziland, Botswana, Namibia and Seychelles, in some countries mirroring ‘undiscovered’ middle classes.
7: Coffee is the world’s most valuable commodity after oil, but African oil producers are nowhere on the radar when it comes to production. Nigeria grows a paltry 40,000 bags, Angola 35,000, and Congo Republic 3,000 bags. Gabon and Equatorial Guinea don’t even bother.
8: Quality is often a determinant of grower prices, or what trickles down to the individual farmers, as opposed to the quantity of coffee produced. Uganda, despite its high production, earned only 67 US cents for its less-prized Robusta strain. Ethiopia, which produces the more-prized Arabica strain, picks up among the highest prices for farmers, at $1 for a pound of green coffee. (Some 4,000 berries are needed to make a pound of final shop coffee). Yet a look at retail prices of roasted coffee shows just how off the mark African countries are. In the US and Germany a pound of the stuff costs about $5, $9 in Italy, $14.99 in Malta and a staggering $19 in the UK.
9: Some African countries have however seized on the economics of value-addition, with Egypt, South Africa, Morocco and even Djibouti re-exporting some of their coffee after buying it, despite not being primary producers. The vast majority of African countries that grew coffee exported green coffee, only to buy it back in coffeehouses at vastly increased retail prices. A cup of coffee in Kenya retails at an average of $3-$5, comparable to average prices in the European Union.
10: When domestic consumption is factored in, Algeria has the highest annual per capita consumption, at 3.2-kilogrammes, ahead of Ethiopia (2.45-kg), Madagascar (1.28-kg) and Ivory Coast at 0.83-kg. Rwanda (0.006) and Burundi (0.012) have the lowest per capita consumption having exported all their product, and are edged out even by Nigeria, which lays claim to every sixth African but grows six times less coffee than both countries.