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Starbucks v Costa

Starbucks, Costa Coffee, MMIIn a cosmopolitan, brand-friendly and wealthy region, where coffee is considered a cultural asset, premium global brands Costa Coffee and Starbucks have turned out to be extremely popular. Both were established in the Middle East in 1999 (in Dubai for Costa and Kuwait for Starbucks) and in less than ten years, they’ve expanded tremendously.

The American giant, operated across the Middle East by Kuwaiti-owned retail specialist M.H. Alshaya, has opened over 200 stores in the UAE, KSA, Lebanon, Qatar, Bahrain, Oman and Egypt. Competitor Costa Coffee, owned by UK’s Whitbread Group, is operated by Maritime and Mercantile International (MMI) in the UAE and Pakistan, by Jawad Business Group in Bahrain, Qatar, KSA and Oman and others in Kuwait, Lebanon, Egypt and Syria. It opened its 150th regional store last summer, with 53 outlets in Dubai alone which made the Emirates the first country outside of the UK to have over 50 Costas.

Years away from market saturation, the two well differentiated brands claim to have found their own niche: Costa harbors a high-quality, slow roasted brew, Italian family business image; Starbucks entertains a definite American style despite its modeling on Italian experience - its incomprehensible, Italian-sounding vernacular has become a trademark.

Hip Joe Forget about the traditional cardamom-infused ‘gahwah’. In just a decade, mere black coffee became redundant. Nowadays, a hip coffee shop does much more than simply serve the usual cup of joe. Customers now expect toppings, syrups, sauces and flavored mixes, as well as a wide range of teas, hot chocolate, sandwiches, pastries, coffee accessories and take-away roasted beans.

In an increasingly competitive environment, extra added value is necessary to meet specific local needs and expand the target customer base. “Traditionalists may get uppity about flavored coffees but that’s how you take coffee to those who don’t like coffee,” says Simon Holroyd, regional manager of Costa Coffee, which regional outlets offer, for example, a far larger frescata range than in the UK, including flavors like watermelon, lemon and mint that wouldn’t work elsewhere.

Even Starbucks, generally accused of spearheading cultural homogenization along with MacDonald’s, Coca Cola and the likes, smartly tuned itself to local tastes. After its seasonal selection of traditional Arabian coffees, its last Ramadan drink, the Date Frappuccino, paired with the new Pistachio Date Cake or the Almond and Date Delight, is described as “the first culturally localized beverage to be crafted for the Middle East,” by marketing manager Antoun Abou Jaoude. Starbucks’ usual focus on food pairing, designed to complement and maximize the flavor of its various coffees, came well in hand indeed, as food items are the next best selling argument.

Raising the bar According to Holroyd, 43 percent of Costa’s customers in the Middle East also buy food, against 25 percent in the West; it thus comes as no surprise that most coffee houses diversified their menus, with Starbucks adding grilled paninis to its menu and Costa Coffee offering a good mix of pastries, salads and sandwiches, such as the recently introduced blueberry muffin or the popular halloumi, mint and cucumber sandwich (another localized touch). Lest we forget the healthy food items, an absolute must nowadays, be it reduced fat versions of muffins, skimmed milk coffee options, fruit juices or smoothies.

But the ‘beyond coffee’ trend goes even further as brand consciousness turned coffee houses into fashionable hangouts; this explains why the British coffee retailer, which earlier focused on increasing brand recognition by establishing high profile outlets at the Dubai international airport for example, has been later securing numerous prime locations.

“We have only one thing to keep in mind: location, location, location,” said Piers Burton, head of retail leisure and business development. “In this part of the world, people don’t drive for miles to get a cup of coffee, so we have to accept that a visit to a coffee shop is incidental.” And a social event too, which implies major practical adaptations: Costa’s customers get served at a table in the Middle East, which is not the case in Britain, and stores are bigger as people tend to sit and stay more.

Today, patrons expect to be offered an urban chic, friendly environment where they can listen to music, play chess, or even check their email and have a business meeting. Starbucks was among the earliest to incorporate wireless hot spots at its caf


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