ES­PRESSO WARS

Although Le­banese cof­fee re­mains king in Le­banon, the in­dus­try’s play­ers have di­ver­si­fied their of­fer­ings in the last 20 years by in­tro­duc­ing the em­blem­atic es­presso shot in a bid to in­crease their brand vis­i­bil­ity, boost profit mar­gins and adapt to a fas

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Le­banon’s cof­fee mar­ket is val­ued at more than USD 220 mil­lion, di­vided be­tween pro­duc­ers and roast­ers. With an an­nual con­sump­tion of 5.8 kg of cof­fee per capita, Le­banon ranks among the world’s top 20 im­porters, ac­cord­ing to the In­ter­na­tional Cof­fee Or­ga­ni­za­tion, mak­ing it a lu­cra­tive and glob­ally in­dis­pens­able mar­ket.

“More than 70 per­cent of the cof­fee is con­sumed the Le­banese way,” ex­plained Roy Daniel, CEO of Barista, sis­ter com­pany of Café Daniel. Apart from in­stant cof­fee, which is en­tirely im­ported, pro­duc­tion is di­vided be­tween es­presso (20 per­cent) and fil­tered cof­fee (10 per­cent). In 2015, rev­enues generated by Le­banese cof­fee alone reached USD 130 mil­lion.

De­spite the fact that 100 roast­ers are in op­er­a­tion, the lo­cal mar­ket is dom­i­nated by just a hand­ful of in­dus­try play­ers, who col­lec­tively hold 80 per­cent of busi­ness. The man­u­fac­tur­ing process re­mains the same for all pro­duc­ers, with the green beans usu­ally ar­riv­ing through Beirut’s har­bor, pri­mar­ily from Brazil, but also from Colom­bia, Ethiopia, Viet­nam and In­done­sia, be­fore they are sent to the roast­ing plants. They are then grounded, packed and

dis­trib­uted or re-exported. “The Le­banese re­tail cof­fee mar­ket con­sumes about 10,000 tons an­nu­ally, val­ued at USD 90 mil­lion,” Nadim Da­han, man­ag­ing direc­tor of Café Su­per Brasil said. “You also need to fac­tor in the amount of sales, un­ac­counted for, made by the coun­try’s small lo­cal shops who of­fer lit­tle, if any, data in that re­gard.”

A USD 10 mil­lion es­presso cup

Ac­cord­ing to Ge­orges Najjar, pres­i­dent of Najjar SAL, “The tar­get au­di­ence of the lo­cal cof­fee mar­ket is the adult con­sumer, not young work­ers who have de­vel­oped other habits.”

Da­han added that Café Su­per Brasil’s cus­tomers were used to con­sum­ing cof­fee the Le­banese way, which, from a pro­cess­ing point of view, was “quite de­mand­ing” as it re­quired sig­nif­i­cant time to pre­pare. “To­day, how­ever, so­ci­ety is evolv­ing and ev­ery­thing is be­com­ing more in­stant, with con­sumers want­ing things im­me­di­ately,” he ac­knowl­edged.

The es­presso bean has taken root in Le­banon, in line with global trends, since the end of the 1990s, and con­tin­ued to gain wide­spread pop­u­lar­ity. From Café Najjar, Su­per Brasil and Abi Nasr to Café Daniel, lo­cal roast­ers have ded­i­cated a part of their pro­duc­tion to the es­presso and cre­ated their own la­bel. Ac­cord­ingly, they have equipped them­selves with spe­cific ma­chin­ery, ca­pa­ble of trans­form­ing the green cof­fee bean into grain, pods and cap­sules.

Mean­while, in­ter­na­tional firms, such as Ne­spresso, Lavazza, Illy and Kimbo, have also im­ported their prod­ucts into Le­banon, mainly through F&B and lo­cal hos­pi­tal­ity dis­tri­bu­tion com­pa­nies. Ac­cord­ing to some of the in­dus­try’s play­ers, the es­presso mar­ket in 2015 was val­ued at USD 10 mil­lion. “With a kilo worth around USD 40, mar­gins are three times higher than with Le­banese cof­fees,” noted Nizar Lababki, former HORECA head for Café Najjar. Since its launch in 1986, Ne­spresso has taken great strides and rev­o­lu­tion­ized the cof­fee in­dus­try. In Le­banon, the op­er­at­ing unit of the Swiss com­pany, which is part of the Nestlé Group, as­signed the Dima Group to han­dle its busi­ness in the year 2000. Ac­cord­ing to our 2015 es­ti­mates, it achieved a USD 4.2mil­lion in turnover, sell­ing 6 mil­lion cap­sules. “It is hard to com­pete with Ne­spresso, which has its niche and a flaw­less mar­ket­ing strat­egy,” Walid Hachem, dis­tributer of the Ital­ian brand Kimbo in Le­banon, said. The Ital­ian com­pany’s rev­enue stands at USD 1 mil­lion. “But, now that they have lost patents on some of their machines, many com­pa­nies have launched their own Ne­spres­so­com­pat­i­ble pods on the mar­ket,” he added. “This can en­tice con­sumers to look for a cheaper op­tion like ours, which is 30-40 per­cent less ex­pen­sive.”

Let’s take the shot out­side

While tra­di­tional Le­banese cof­fee re­mains as­so­ci­ated with fam­ily gath­er­ings and cozy liv­ing rooms, the es­presso shot has es­tab­lished it­self as the most com­mon brew re­quested in pub­lic. When it comes to Le­banon, the bev­er­age is mainly con­sumed in ho­tels, restau­rants, of­fices, shops and banks. This trend makes it eas­ier for the brands to reach a large au­di­ence and pro­mote them­selves. Some use their es­presso of­fer­ing to sell ad­di­tional prod­ucts, such as al­co­hol and va­ri­eties of nuts. To gain mar­ket share, lo­cal pro­duc­ers and im­porters have also de­vel­oped dif­fer­ent or­der­ing sys­tems, with some, such as Ne­spresso and Illy, even open­ing their own shops. They have also started sell­ing a large num­ber of es­presso machines. “Most of our sales come from machines we sup­ply on a con­sign­ment ba­sis,” ex­plained Daniel. “You run an of­fice, we loan you a ma­chine and in ex­change you com­mit to drink­ing a cer­tain amount of cof­fee each month. It re­quires a sig­nif­i­cant in­vest­ment, since you have to take into ac­count the pur­chase of the machines and a rig­or­ous main­te­nance and af­ter-sales ser­vice fee.”

He added that his com­pany em­ployed more peo­ple for main­te­nance than for sales. Si­mul­ta­ne­ously, the in­dus­try is still tar­get­ing house­holds, which is Ne­spresso pod sys­tem’s main mar­ket. “Cap­sules and pods help us en­ter homes where Le­banese cof­fee still has the up­per hand,” said Daniel who, through his Barista brand, sells Ne­spresso-com­pat­i­ble prod­ucts. “These prod­ucts meet to­day’s fast-paced so­ci­ety. They are avail­able in su­per­mar­kets and re­quire very lit­tle prepa­ra­tion.”

Hachem ac­knowl­edged that mak­ing an es­presso at home ne­ces­si­tated a small in­vest­ment for a ma­chine. “You can find one for about USD 100, which may not be af­ford­able for all, but it tends to be­come cheaper with more com­pet­i­tive pric­ing,” he noted.

The es­presso trend has gained mo­men­tum over the last 10 years, with pro­duc­tion on the rise for lo­cal roast­ers and higher im­ports for dis­trib­u­tors. How­ever, in­dus­try play­ers dis­miss the idea that es­presso will eclipse de­mand for tra­di­tional Le­banese cof­fee. “De­mand for es­presso is grow­ing and new play­ers are try­ing to en­ter the mar­ket ev­ery year,” Fi­ras Abi Nasr, man­ag­ing direc­tor of the Abi Nasr group ac­knowl­edged. “We have man­aged to earn a rep­u­ta­tion thanks to es­presso. But Le­banese peo­ple also like the tra­di­tion as­so­ci­ated with drink­ing Le­banese cof­fee, which has, over many gen­er­a­tions, be­come part of our so­ci­ety’s DNA. Try­ing the es­presso doesn’t mean you’ll love it!”

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