Mizzima Business Weekly - - CONTENTS - Jerome Tay­lor

Myan­mar cof­fee scene fu­elled by mid­dle class caf­feine high

Be­hind a wooden counter in down­town Yan­gon's Cof­fee Club, the un­mis­tak­able hiss of a barista steam­ing milk briefly drowns out a funky sound­track piped through a store filled with stu­dents glued to their smartphone­s.

Long ab­sent from the re­gion's boom­ing cafe cul­ture, Myan­mar's com­mer­cial cap­i­tal is now wit­ness­ing a surge in swish cof­fee bars pro­vid­ing an al­ter­na­tive to the trea­cly in­stant cof­fee served by thou­sands of street carts.

It is a trend that points both to the chang­ing tastes of Myan­mar's emerg­ing mid­dle-class but also the widen­ing gap be­tween them and the na­tion's poor.

U Nyi Nyi Tun, a doc­tor, is typ­i­cal of the newly as­pi­rant cus­tomers rel­ish­ing con­sumer goods that were ei­ther far be­yond their reach or sim­ply un­avail­able un­der Myan­mar's bru­tal and eco­nom­i­cally in­com­pe­tent mil­i­tary dic­ta­tor­ship.

“I came here to read,” he said, sip­ping an americano and pe­rus­ing the web on a tablet. “With friends, a street­side tea shop is bet­ter. But if you want to be some­where alone and quiet, then this kind of cof­fee shop is good.”

To es­cape the noisy on­slaught of Yan­gon's in­creas­ingly ve­hi­cle-clogged streets, U Nyi Nyi Tun is will­ing to fork out as much as $2 - ten times what a tra­di­tional Myan­mar cof­fee made from pre-mixed sa­chets and con­densed milk costs at road­side stalls.

Since the end of out­right mil­i­tary rule in 2011, around two dozen spe­cial­ity cof­fee shops have opened up in Yan­gon alone.

“You will wit­ness ex­po­nen­tial growth of the cof­fee in­dus­try in the next three years,” pre­dicts U Ye Naing Wynn, man­ag­ing direc­tor of the Nervin Cafe chain, Myan­mar's old­est, which now boasts five out­lets in­clud­ing in Mandalay and Nay Pyi Taw.

Ini­tially it was the large in­flux of ex­pats and tourists that helped foster Yan­gon's nascent cof­fee scene. But own­ers say lo­cals now make up the ma­jor­ity of drinkers.

“That's my tar­get au­di­ence go­ing for­ward to be hon­est... be­cause any food and bev­er­age busi­ness that re­lies 70 per­cent on lo­cals ought to do well in the long run,” says Thura Ko Ko, who re­turned to Myan­mar from over­seas four years ago and opened The Cof­fee Club above an­other of his busi­nesses, a mo­bile phone shop.

It helps, he adds, that spe­cial­ity cof­fee is seen as some­thing as­pi­ra­tional and trendy.

“Some­times I sit in and I over­hear some new lo­cal cus­tomers try and they're not quite sure what a cap­puc­cino is, but they've seen it (on) the TV, they've seen it on­line and that's been a big in­flu­ence in life­style as well. Ev­ery­thing from Korean soaps to films,” he says.

The eco­nomic po­ten­tial of Myan­mar's grow­ing mid­dle class is not lost on in­ter­na­tional com­pa­nies who are scram­bling to ac­cess one of Asia's last un­tapped mar­kets.

In 2013 Star­bucks CEO Mr Howard Schultz hinted dur­ing a trip to Thai­land that he was eye­ing Myan­mar while Carls­berg is also hop­ing to break into the beer mar­ket.

Man­age­ment con­sult­ing gi­ant McKin­sey be­lieves up to a quar­ter of Myan­mar's pop­u­la­tion could be living in large cities by 2030, up from 13 per­cent in 2010, while the econ­omy, if man­aged prop­erly, could quadru­ple from $45 bil­lion in 2010 to $200 bil­lion by 2030.

“The size of the ur­ban mid­dle class is ex­pected to dou­ble over the next decade, with an­nual dou­ble-digit growth in mid­dle class in­comes over the next five years,” says Ra­jiv Biswas, Asia-Pa­cific chief econ­o­mist at IHS.

But Sean Tur­nell, an ex­pert on Myan­mar's econ­omy at Mac­quarie Uni­ver­sity in Australia, warns against over­hyp­ing the po­ten­tial of the mid­dle class in a coun­try where the vast ma­jor­ity of its 60 mil­lion pop­u­la­tion are the ru­ral poor.

“Se­ri­ous con­sump­tion usu­ally starts for peo­ple with dis­pos­able in­comes above around $5,000. There would be few in Myan­mar with this sort of spend­ing power,” he says. [AFP]

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