COFFEE AROUND THE WORLD: THE MIDDLE EAST (Part 3)

The following post is part of a series that discusses the coffee industry landscape in a particular region of the world, and the opportunity for development of the Newbeans CTAPS (Coffee Tasting and Profiling System) there.

Through this series, we explore the viability of creating and developing a global web-based, green bean purchasing ecosystem, like the Newbeans CTAPS.

Read the previous parts of our Middle East feature:

PART 1: Coffee Culture in the Middle East: Why Coffee is making a “comeback” in its birthplace

PART 2: Western Influence and Young Consumers: How they are driving Coffee Consumption in the Middle East


The Future of Coffee in the Middle East (Part 3)

With thousands having access to the Internet and going online every year, in addition to the boost in mobile commerce traffic, the Arab peninsula has become the fastest growing e-commerce sector in the world. According to ArabWorld’s Online Payment Report for 2014, which covers the UAE, Saudi Arabia, Egypt, and Kuwait, the following developments are taking place in the Arab e-commerce sector: [8]

  • There are more credit card holders, but COD is still strong.middle-east-ecom

In the UAE, 60% of the 3.65 million e-commerce customers are located in Dubai, while another 27% are in Sharjah and Abu Dhabi collectively. In Egypt, 27% of e-commerce purchases are paid for with a credit card, while cash on delivery makes up the remainder.

  • Online basket size is growing in the Arab peninsula.

Saudi Arabia saw an overall increase in e-commerce basket size. There was an increase of 8% for cash-on-delivery orders in the last year, increasing from $143 in 2013 to $154 in 2014. Credit card orders then saw a 32% increase in the last year, increasing from $96 in 2013 to $127 in 2014.

Egypt saw the largest increase in e-commerce basket size. There was an increase of 16% cash-on-delivery orders in the last year, increasing from $83 in 2013 to $96 in 2014. Credit card orders then saw a 36% increase in the last year, increasing from $71 in 2013 to $96 in 2014.

 

  • Arabs use mobile commerce twice as frequent as the rest of the world.

People in the Arab World transact on mobiles more than the global average. 41% of smartphone users in the Arab World transact online, while only 21.3% of global smartphone users transact online.

18 to 26 year olds make up the largest demographic group of mobile payment users with 39% of the market. This age group is expected to reach $2.45 trillion in transactions worldwide by 2015. The next largest group is the 27 to 39 year olds with 31% of the market, followed by 40 to 61 year olds with 26%, and 62 and older with 3% of the market.

 

All these indicate that there is a large opportunity for online coffee roasting in Arab countries, particularly Dubai and Saudi Arabia. Not only are young consumers driving coffee consumption, they are also the leading users of e-commerce in the region, proving that online coffee ecosystems have a chance to flourish in the market. It should be emphasized that young consumers specifically look for premium coffee experience coupled with convenience, both aspects that Newbeans CTAPS system can provide.

Of importance will be the provision of COD options and mobile-responsive e-commerce pages given the habits stated above.

Instant still King, but Specialty Coffee is catching up

If instant is still King in these Arab nations, who are the major players? According to Euromonitor International, traditional coffee still rules in Saudi Arabia, while instant retail coffee leads in Dubai and Morocco: [5]

  • In Saudi Arabia, El Farouki Coffee Center led coffee in 2014 with a 15% value share. The company had a strong following among consumers of traditional coffee such as Arabic and Turkish coffee.
  • In the United Arab Emirates, Nestlé Middle East FZE maintained its leading position within coffee in 2014, with a retail value share of 26%. The company managed to create a modern image, while benefiting from strong brand equity.
  • In Morocco, Nestlé Maroc SA leads sales of coffee in Morocco in 2014 with a 29% value share. The company is marketing one of the most popular coffee brands in Morocco under the name of Nescafé.

While traditional-style coffee and instant coffee are still lording it over in these major parts of the Middle East, young consumers are also waking up to specialty coffee. Given specialty coffee’s popularity in the West, the trend is already catching up in major cities in the Middle East – led by Dubai.

The Middle East’s unique brand of Coffee: Old Mixed with New

The entry of independent roasters serving fresh coffee has influenced early adopters, and more cafes are beginning to serve better-prepared coffee.

What is peculiar about Middle East however, must be pointed out, as it determines the beans that will sell. Whereas in other markets, taste, aroma, acidity and roast determine the offtake of beans, in opulent Saudi Arabia and Dubai, size and relation to tradition seem to play importance.

Al fresco coffee in Dubai

Al fresco coffee in Dubai

For example, in an interview with William Reed Business Media, one roaster pointed out that there are many instances in Dubai when customers purchase coffee simply based on the size of the beans. “The Mexican Maragogype beans are the biggest I’ve ever seen. It doesn’t make any difference to the flavour, but it makes it more exciting to a Dubai person who wants everything to be the biggest and the best,” explains Matt Wade, a Dubai-based roastmaster. [6]

In some cases, the origin matters as well, as in the case of East Harari Coffee. “The biggest importer of East Harari Coffee is Saudi Arabia, because Harar is one of the holiest sites in Islam,” explains Wade.

It seems the coffee culture in the Middle East will be more complex than simply Westernized or Traditional. And the wide range of options can only be good news for the coffee industry — whether the consumer is chatting with friends over gahwa in a traditional gavheh kaneh, or working as a young professional fuelled by lattes in a vibrant, European or North American-style café, either way, $121 million (Dh444m) is spent on coffee each day in this country. [7]

The changing taste and increasing interest in specialty coffee does not mean traditional coffee customs are about to perish. In fact, it’s quite the contrary. The Middle East seems to be developing a coffee culture all their own – one where traditional and artisanal coffee coincide.

Conclusion

The growing interest of the young consumers and the openness of traditional Arab consumers to Western way of life, coupled with increasing Internet and social media penetration, provide a sound business environment for online coffee roasting in the region.

As seen above, Arab consumers are seeking coffee experiences and products similar to those found in European-style cafes and North American coffee shops, but with the option to enjoy or combine with their traditional coffee preferences. The “modern” coffee experience combined with using origin beans, adding spices, and the chance to enjoy them in the traditional coffee house are what make up the unique coffee preferences of the market. All these call for a coffee roasting company that will be able to adapt and meet these distinctive needs.

The Arab consumer’s need for both convenience and coffee products specialized to meet their unique palate is a gap that Newbeans CTAPS ecosystem can fill.

On the next part of our Coffee Around the World Series, we tackle the thriving coffee culture in Asian countries.

References:

  1. “How much does the Middle East spend on coffee?”, KippReport.com
  1. “The History of Coffee”, National Coffee Association of the USA
  1. “New Consumers Drive Coffee Growth in Saudi Arabia and Morocco”, Euromonitor International
  1. A New Saudi Arabia is Suddenly in a Hurry in Era of Cheap Oil”, Bloomberg
  1. Coffee in Saudi Arabia”, “Coffee in the United Arab Emirates”, “Coffee in Morocco”, Euromonitor International
  1. UAE is Waking up to Specialty Coffee”, Food Navigator
  1. UAE’s Coffee Culture”, The National
  1. Arab countries undergoing a revolution of e-commerce”, Evigo

Photo Sources:

  1. “Al fresco coffee shop in Dubai”, Spilling the Beans
  1. “Online Shopping in the Middle East”, Mastercard Newsroom

This entry was posted in Case Studies, Coffee News. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *