Although sub-Saharan Africa produces some of the world’s finest coffee beans, Africans still consume very little of the beverage, with the bulk of coffee beans being grown as a cash crop for export.
However, a recent briefing note by pan-African banking group Ecobank suggests domestic coffee consumption is set to rise, supported by an emerging urbanised middle class which is stimulating demand for consumer goods.
According to Ecobank, sub-Saharan Africa’s leading coffee drinking nations are Ethiopia and Madagascar, annually consuming 2.27kg and 1kg per capita respectively. This is still much lower than other emerging markets such as Brazil (6kg) and Algeria (3.2kg). In the European Union annual per capita consumption is close to 9kg.
Across the region there is already a growing presence of local coffee shop chains such as Nigeria’s Neo Café, Kenya’s Artcaffe and Java House, and Ethiopia’s Kaldi’s. Global coffee giant Starbucks – in partnership with local franchise operator Taste Holdings – has also announced the opening of its first sub-Saharan stores in South Africa next year.
Despite the financial strength of Starbucks, there should still be plenty of market space for local coffee chains, given that Starbucks, as Ecobank puts it, “will sell its coffee as a premium product, reflecting its emerging market strategy to position itself as an aspirational brand. It will not appeal to all price-conscious African coffee drinkers.”
The growth of domestic coffee consumption and of local coffee retailers could revive Africa’s coffee sector, which has been suffering from sub-optimal agricultural value chains, high cost of production, and a small local market. These challenges have prompted African coffee producers to export raw beans as opposed to extracting the full value.
“The key to capturing the full value of African coffee will be in building robust value chains that ensure that the beans flow seamlessly from farmers to African traders and roasters, and onwards to African consumers,” says Ecobank.
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