Los Angeles, CA – International coffee purveyors, US-based Starbucks and Colombia’s Juan Valdez, have both announced major expansion plans…in each other’s own front yard.
Starbucks has opened the doors at its first operation in Bogota, Colombia – the South American country synonymous with coffee, while Juan Valdez has countered with a new coffeehouse in Miami, Florida.
The new Bogota Starbucks is a three-floor, 2,700-square foot operation, the first of a planned chain of 50 the company plans to open throughout the country over the next five years. It will also be the only Starbucks in the world to serve exclusively only locally-sourced coffee.
Starbucks’ stores in Colombia will be operated as a joint venture with two of the company’s regional Latin American business partners, Alsea and Colcafe, a subsidiary of Grupo Nutresa, Colombia’s largest food company.
Alsea currently operates more than 520 Starbucks in Mexico, Argentina and Chile, while Colcafe worked with Starbucks to develop ‘soluble coffee’ product.
The company has heavily invested in Colombia, which serves as its primary source of arabica coffee, a mainstay of its menu.
In 2012, Starbucks opened a Farmer Support Center in Manizales, Colombia to deliver training and agronomy support to Colombian coffee farmers.
Last summer, Starbucks announced a public-private partnership with the US Agency for International Development that is investing $3 million to increase Colombian coffee yields and to enhance economic opportunities for Colombian coffee growers, according to the company’s website.
Not to be outdone, Colombia’s own Juan Valdez, the coffee brand backed by the Colombian Coffee Growers Federation (Procafecol), is expanding its footprint in Starbuck’s home turf with the opening of a new coffee house in downtown Miami, Florida.
Procafecol, which represents more than 500,000 Colombian coffee-growing families, said it will work with an unnamed Florida franchisor to open four more stores in Miami by the end of this year with an additional 60 sited throughout the state over the next five years.
The new Florida operation isn’t the Colombian company’s first attempt to build a retail chain in the US. It currently operates seven stores in New York, Washington and the Miami International Airport.
The moves by both companies underscores the nature of the ongoing competition for an upscale market that in the US alone generates $18 billion in business annually.
But, whatever the competitive dynamics of the so-called ‘coffee clash’, Juan Valdez will have a long way to go to match the clout of rival Starbucks in Florida and elsewhere.
Customer Loyalty
With 200 stores in Colombia alone, Juan Valdez has garnered a vast reservoir of customer loyalty, both in its home country and regionally.
It is heavily invested in developing Colombia’s country’s coffee industry, a bulwark of the country’s economy. Since its founding in 2003, the coffee chain has funneled more than $20 million to a national fund that supports the country’s 560,000 coffee-growing families, some of whom also own shares in the company.
Most of its 450-plus current cafes are in Latin American countries, though they span as far as South Korea and Kuwait.
There are, however, more than 400 Starbucks in Florida alone, and, while, Procafecol’s total sales are expected to reach $85 million this year, up from $74 million in 2013 and $67 million the previous year, Starbucks is projecting 2014 sales of $16.5 billion, according to reports released by both companies.
There are more than 20,500 Starbucks locations in 65 countries. In 2002, Starbucks opened its first location in Mexico. Since then, the chain has expanded into Latin America with more than 700 stores in 12 countries including Peru, Brazil, Argentina, Costa Rica, and soon, Bolivia and Panama.
Despite the David and Goliath caste to the parallel developments, Procafecol is, at least outwardly, welcoming the competition with the group’s Director of International Sales, Alejandra Londono, was quoted as saying, “There’s room in the market for us both.”
07/25/2014