British coffee chain Costa, the world's second biggest branded coffee chain, is planning to roll out coffee vending machines under the Costa Express label at various locations in the UAE. It also plans to add 20 more Costa coffee outlets to take its total number of outlets to 100 by next year, a top company official said.
Costa has recently acquired Coffee Nation — which runs a large international network of coffee-vending machines. It is currently rebranding them to Costa Express and strengthening the network by having 800 machines in the UK, before launching it in the UAE.
Costa has 270 outlets in the GCC, including 80 in the UAE — where it has a partnership with Emirates Group in expanding its retail presence.
The company operates 1,871 outlets across 25 countries including 1,270 in the UK — its home market where the chain controls 38 per cent of the market, Andy Marshall, chief operating officer for Costa International, told Gulf News in an interview.
Article continues below
"Despite the economic downturn, our sales have grown in many countries. The coffee sector has been very resilient during the financial crisis," Marshall says. "We have demonstrated a double-digit growth in the international market and a single-digit growth in home market."
The company's Middle East operations have also been growing.
"Our like-for-like sales in the Middle East remains positive while we have seen a 15 per cent growth in like-for-like sale in the UAE," Marshall said. "Overall, we have not suffered due to the economic crisis."
Costa is part of Whitbread Group of the UK, which also owns Premier Inn hotels. Emirates Group is a partner with Whitbread Group in rolling out Premier Inn hotels across the country.
However, a price spike in the international markets forced Costa to reduce operational costs.
"Prices of green bean jumped 50 per cent over the last few years. We had to bring in operational efficiency to offer coffee with the same price yet manage to remain profitable," he said.
The company has recently opened its 100th outlet in China — its fastest growing market, while it will add 40 outlets in India where it operates 80 outlets.
In comparison, Starbucks runs 15,500 outlets of which 4,500 are outside its home market, the USA.
Marshal says his company's strategy is to move into new markets and grow faster than its rival to catch up. It is growing at a faster pace in the emerging markets where it wants to overtake Starbucks.
"The BRIC [Brazil, Russia, India and China] countries are a major growth area for us and we want to get the fast-mover benefits from these regions, to be able to increase our global market share," Marshall says.
Costa is set to open 300 outlets worldwide over the next year, as part of the expansion plan.
Coffee is an affordable luxury for those earning above $20,000 (Dh73,438) per annum, research shows. That way, more than 1.5 billion people are served by 11,000 branded coffee shops worldwide.
Testing new concepts
"This averages out seven coffee shops per million people," Marshall said. "In the UK, there are 4,000 coffee shops serving 55 million people — averaging 72 outlets per million people."
In the UAE, roughly about 250 branded coffee shops serve about 6 million people, averaging at around 42 coffee outlets per million people.
Costa is using the UAE as a test bed to try new concepts, Marshall said.
"The UAE is a very exciting market. We are testing new concepts — such as a new store design — in the here. Once it is proven successful, we are taking it to the rest of the world."
* 270: Costa outlets in the GCC, 80 of them in the UAE
* 1,871: outlets operated by Costa across 25 countries
Costa was founded by Italian brothers Sergio and Bruno Costa in 1971. The company apparently uses 1 per cent of the world's coffee production for its operations, taking particular pride in its Mocha Italia blend.
Costa Coffee was the first coffee shop chain to commit to sourcing beans from Rainforest Alliance (RFA) certified farms.
All Costa coffee comes from 100 per cent RFA certified farms. It was the first coffee chain to control the whole coffee-making process from start to finish, involving no one else in sourcing, storing, blending, roasting, grinding or dispensing the finished product.