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  Coffee break: South Africa’s developing taste.   Coffee break: South Africa’s developing taste.  Ron Irwin  
         
 
Coffee break: South Africa’s developing taste. Local South African Brands Mimic Overseas Counterparts

Starbucks, as a brand, has not landed on the shores of South Africa. So visitors who crave their daily latte must visit Seattle Coffee, a brand that isn’t from Seattle at all. Sandy Barlow is a partner at Howie Parker Investments, the company that transported the franchise down from the UK in 1997, the year before Starbucks bought it out and converted the UK shops to their own brand name.

She explains that Seattle Coffee in South Africa is the only remnant of a brand name that’s been gone for almost a decade. It’s an odd story indeed, odder still given the popularity of the shops across Cape Town, where, as in the US, visitors can drop in and experience free Wi-Fi and coffees that are fairly similar to those served in Starbucks. “We introduced this type of coffee culture to South Africa in 1997,” Sandy claims, “before anyone had heard of lattes or skinny mochas.”

“Our primary point of differentiation now,” she says, “is in the quality of our beans (bought from all over the world), the way they are purchased, and the way in which they are roasted.” However, brand management plays an important role alongside bean quality in establishing differentiation: “Some are marketing their brand quite proactively and these places have become hot spots...”

The Portuguese-themed Vida e Caffé brand, for example, is doing some serious “proactive marketing.” It opened its flagship shop five years ago across the street from one of Cape Town’s premier Seattle Coffee shops. The company has managed to succeed in South Africa by differentiating its branding from its American and Italian-influenced competitors. It offers not only the usual ultra-hip, shouting and singing baristas, but a far more fashionable spirit. Bright colors, loud music, and an atmosphere of trendier-than-thou coolness infuse the shops.

Shaun Bond, the marketing director and partner at Vida e Caffé, says that the brand name means “life and coffee.” He told us that the unique stores are “based on a typical European street-side café with a very unique South African twist.” The coffee is roasted in Portugal, but “the rest, we are proud to say, is one-hundred percent South African.” In only five years his stores have grown to nineteen (versus Seattle’s twenty-five) with no end in sight for growth potential. He characterizes the South African ultra high-end coffee drinker as a “very new category with a disposable income.” He further describes their racial background as a “Eurocentric-African cross.” South Africa, Shaun feels, has both tea and coffee in its soul, “from our roots, both British and Dutch.”

“We’ve also partnered up with other like-minded brands,” Bond says, “such as Levis, Mini, Lindt, Converse, and Virgin.” But the associations do not end there, he explains, referencing the Vida Brand book, which outlines the branding concept, the menu, the blend, and the company’s support of local Jazz musicians and its “MVPs,” or “Most Valuable Personalities,” who include A1 Driver Christano Morgado as well as South African pro wake boarder Lloyd Stocks and model Tracy Macgregor.

 
High-end Coffee in South African Culture

A typical “cuppa” at Seattle Coffee costs about eight rands (R8), or just over one US dollar. That’s a hefty cost for the average South African, especially given that it’s a “take-away” offering (you take your coffee to your table yourself). South Africans are used to paying half that amount for lower quality take-away coffee from fast food outlets. In restaurants, coffee brewed in a machine is still referred to as “filter coffee” and comes at a premium price. So, considering that a tall latte at Seattle Coffee can run up to R15 (US$ 2), Seattle Coffee profits well from the novelty factor. Yet, upon purchasing a cup of coffee, South African customers insist on sitting down and enjoying it.

Maybe it’s those domed lids. South Africans just don’t get them. Overseas, Starbucks benefits heavily from the “to go” factor, something that is not a draw for South Africans. It’s just not an “on the go culture.” It’s a “take a break culture.” It’s a culture that, after all, has long ago worked a tea break into the weekday. Roman Cylkowski, of Johannesburg-based Blitzforce Marketing, explains it this way: Because most South Africans work outside of the inner cities—mainly in offices or industrial parks—there seems to be a tendency for them to look for an attractive environment in which to drink coffee, “rather than grabbing a cup of their favorite brew and taking this up to their office.”

Vida e Caffé works on essentially the same price points but is a stripped down version of Seattle Coffee and attracts a younger, hipper, more mobile crowd. While a customer at Seattle Coffee is busy surfing the web on a notebook computer, the Vida customer is sitting on the street with sunglasses on, sending a text message via mobile phone. Ironically, Vida e Caffé shops are downright uncomfortable. Their hard plastic benches and stools are no match for the deep leather chairs and wooden seats over at Seattle Coffee. When in Vida’s minimalist setting, one feels on display, which also might be the point.

Success Attracts Overseas Brand Names… and Competition

The success of these local stores has attracted the likes of Gloria Jean’s Coffees, an American franchise that found success in Australia. The company’s PR consultant, Dionne Domyan in Johannesburg, notes that not only is Gloria Jean’s ten times the size of Starbucks in Australia (400 stores versus a meager 36), it also has won “every award going in the Australian business market.” With 800 stores currently worldwide and another 300 planned, Gloria Jean’s looks to be the first outsider in South Africa set to offer heavy competition to the locals. They claim to have a target of thirty stores within the next twelve months, which, if they reach it, would make Gloria Jean’s easily the fastest growing chain in the country—not least because they bring so much offshore finance to the equation: an initial injection of R27 million (US$ 3.8 million) followed by another R45 million (US$ 6.4 million).

Here we have another American-sounding brand that seems perfectly catered to South African markets. It also offers a South African based “coffee university” to train local baristas. Vida must be watching with some unease as this juggernaut arrives and opens up stores three times faster than it has. “In terms of our target market,” says Dionne, “definitely Vida is our top competitor.”

 
The Future of Coffee in South Africa Smells like Tea

Though the branding dynamics in South Africa greatly resemble those created by Starbucks in the US, South Africa may be leading the latest revolution in the coffee industry: red espresso. Monique Ethelston, a global marketing strategist, describes it best: “Essentially red espresso is the world's first tea espresso.” Red espresso is made from a natural red herbal tea called “rooibos,” which means “red bush.” It is found only in the mountains of the Eastern Cape of South Africa. The tea leaves are ground-up, pulled and extracted in an espresso machine, and drunk just like espresso. “Instead of playing in the tea space, we chose instead to be the tea that plays by coffee's rules,” says Ethelston. This thinking is reflected in the red espresso brand tagline: “Who Would have Thought a Tea Could Play By Coffee’s Rules?”

The red espresso brand has totally revamped one of the oldest products in the South African marketplace and taken advantage of the fact that rooibos is an excellent health drink, drunk locally for years for everything from allergies to rheumatism. Recent research has found it to be on par with green tea in terms of its antioxidant content, bringing the red espresso into vogue with consumers who wouldn’t touch a latté with a celery stick. “More and more people are becoming health conscious, particularly about their caffeine intake,” says Ethelston. “[They] are looking for a healthy alternative to coffee which still offers them the same style and sophistication. And so... red espresso.”

And in keeping with South African culture, it most likely won’t be consumed on the go.     

[15-Oct-2007]

 
  
  

Ron Irwin is a brand consultant and writer based in Cape Town, South Africa. He has lectured extensively on brand management at the University of Cape Town School of Management Studies and to local companies. Find him on the web at ronaldirwin.co.za.

     
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Coffee Break: South Africa’s Developing Taste
 
 Two observation's, first one around Wi Fi access. Both Seattle and Vida have Wi FI access, but this is not free at either outlet, you having to purchase access. Second observation is around the culture of take away coffee. Depending on the location of the outlet this appears to fluctuate quite dramatically, as the Seattle in Mandela Square appears to do the bulk of its volume in take away servings based on personal observation whilst an outlet in Hyde Park does far less. 
Shaun Holt, Finance Projects Manager, SAB - October 15, 2007
 
 Dear Ron.

Well done for painting a one-sided view of the SA coffee business. One may as well suggest that the Dutch have no coffee culture at all, since there is only one Starbucks here. Even though each train station offers coffee-on-the-go; supermarkets offer it for free; pure instant coffee can only be found on bottom supermarket shelves; chicory blends are almost unheard of.

Plse allow me to explain:

- The House of Coffees is an SA institution and pioneered the art of roasting coffee beans in the 60’s.

- Mugg 
Mark de Vries, Packaging Development Consultant, Amsterdam - October 15, 2007
 
 I agree with the article, firstly SA does not have a take-away coffee culture, stop trying to justify it. Environments are more restaurant based and encourage sit-down. When you travel to civilised cities with an on the move "take-away culture" you will see the difference of serving and output a Starbucks, Cafe NERO, Costa or Pret undertake to service the early-morning rush-hour, lunch and afternoon pick-me-up. South Africa is very different.

As for free WIFI access, it is deemed free as one doesn't have to subscribe to the signal but pays for the time they utilise, coming from Finance I thought you would understand this. 
Mark Delmar, Brand Manager, InBev - October 15, 2007
 
 Just in response to Mark's comment around the 'deemed free' internet access, anytime you have to pay for something it can no longer be deemed free. You are effectively paying for access including the signal which is all costed into the rate per minute/period/data you subscribe to. My interpretation of free is just that, free with no cost for time or access. 
anonymous - October 15, 2007
 
 Mark -

In your statement about "civilised cities", your Euro arrogance is clearly evident. And your vitriole against Shaun with regards wifi is unnecessary. 
anonymous - October 17, 2007
 
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