Cafes offer a novel social interface for people from all walks of life. In Middle East, Cafes are popular as the cultural precincts forbid Liquor bars. The region offers an excellent opportunity for the franchised cafe concepts.
Coffee has been the preferred beverage in the Middle East and ‘ghahwa’, the traditional coffee-house has been a social meeting spot since the 15th century in the region. Therefore, coffee and cafes have always been very popular in the social culture of the UAE. Also, the Hookah lounges or shisha (which are way of life in the Arab Culture) are normally not licensed to serve liquor offer other beverages like coffee, tea, soft drinks along with snacks to its clients. The practice further drives the Coffee culture in the region and offers enormous business scope for the Cafe concepts. Therefore, many international and local beverage and Cafe brands have thronged the Emirati market.
UAE Coffee sector
In the year 2010, projected coffee sales showed UAE as emerging as world’s rapidly increasing market for coffee in terms of volume. As per the estimates, total coffee volume sales may grow by 80 per cent in 2014 i.e. growth rate of more than 12 per cent compounded annually in the time period of 2009-2014. The trend of modern Cafés began in the UAE with launch of local Gerard’s cafe chain introduced in the 1990s.
The leading international brands having presence in UAE includes Costa Coffee; Coffee Bean and Tea Leaf; Barista; Starbucks. Other brands like Barista, Seattle's Best Coffee, Hédiard, Café Nero, Café Supreme, Blenz, Second Cup, Segafredo Zanetti etc have made their mark in the country’s beverage sector. As franchising has helped many of these brands to achieve quick expansion and capture a large market share, many more café Concepts have adopted the franchise model to access the booming café market in the UAE. Also, the local franchise concepts such as Café More and Café Ceramique are making their presence felt and seeking further expansion in the Middle East.
Key demand drivers
The influx of international café concepts in the UAE presents a variety of options to the consumers. They are leveraging on the increasing demand for such facilities in UAE due to factors such as:
Large consumer market: The UAE has multi ethnic population with large expat community belonging to different countries that have varied preferences and are also keen to experiment with different coffee flavours enhanced with different ingredients. Large Indian expat community who are traditionally tea lovers are also now increasingly consuming coffee due to high disposable incomes and because cafes are easily accessible. Moreover, the cafe chains are targeting high footfall locations such as shopping centres, high streets, educational institutions, airports and business centres to open the coffee shops. Therefore, the franchisors have a large and varied café market to cater.
Young and women consumers: Traditionally, men visited the Coffee houses but now with changing times, the country has a vibrant nightlife. But owing to religious and cultural barriers, alcohol consumption is still unacceptable. Therefore, such café’s provide a suitable platform for social interaction among young people and women in conformity with the local customs.
Price Factor: One of the advantages of visiting a coffee-shop chain that one can have is drink coffee along with quick snack or main meal, hence one may for go full meal as the stores offer range of eateries including cakes, pastries, biscuits, sandwiches and salads which the clients may prefer in lieu of full course meal at much lower price.
Work & Business: For working people and industry professionals such cafes are apt place for business meetings. The work culture in the UAE includes lunchtime meetings. For this consumer segment, the coffee outlets are offering Wi-Fi and newspapers so that they can work while sipping coffee. Brands like Starbucks, Second Cup, C House provide Wi-Fi services at their stores. Therefore the café’s are able to attract wide range of consumers including university students, executives and professionals etc by offering such services.
Competition: With many brands competing for their share in the UAE Café space, innovation is the key to attract customers and win their loyalty. The Café franchisees require offering value for money to their consumers in terms of product offerings as well as entertainment. Many cafe concepts have offer relaxed ambience luxurious settings, music, chess games, books etc and maintain highest service and quality standards.
It is to be noted that owing to the flourishing Café Culture in the UAE, the modern coffee shop sector has enormous scope for the international and domestic café concepts to launch and seek further growth in the UAE. With several players in the café market and the highly competitive nature of the F&B sector, the franchisors that are able are able to understand consumer tastes and preferences and offer innovative products will be able to win customer loyalty.
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