“For example, you can’t get fresh milk there, and if you do its ludicrously expensive… Angola, I mean I’m not an economist, but there is definitely a supply and demand issue,” he explained. “It’s so expensive because the demand is so high because there is no supply. Same thing for milk; there is just not enough cows, as an example. But in my mind that is why there is that disparity issue. I don’t see it changing any time soon.”
However, markets like Ghana are a lot easier and the capital Accra has been identified as a place where the brand should do well. “From a Ghana point of view you have a growth economy, so we know that,” added Dutton. “We have a scenario where it’s a lot easier to do business than a lot of African nations. There are many dynamics, but firstly it’s peaceful. There is the first tick. It’s safe to visit, etc, and like I said business is relatively easy to do, trade is easy to do, and we have got a strong partner. So it ticks a lot of boxes.”
The plan to expand vida e caffé into Gaborone (Botswana) has also been described as an easy entry into an African market. “It’s almost like an extra [South African] province, in many ways; it’s so close, it’s so easy. A lot of the work has been done for us; the malls are there… a lot of South African brands are there and working, and I mean the risk in Botswana has got a hell of a lot lower than in the rest of the places [in Africa]. Maybe there isn’t that same scope for growth though, it’s not the biggest market, but we expect at least five stores in the next three years in total.”
Dutton said that he is also interested in expanding to markets such as Mozambique, Zimbabwe, Kenya and Zambia. He noted that, because each African country is so different, they still have a lot to learn about each market but their strategy is to partner with strong operational partners and be the first to market in these countries, especially as a coffee culture is starting to develop in these regions.
“[Our interest in] Zambia is linked to a bigger deal that we are working on with a bigger partner who has exposure in many African countries,” said Dutton. “So let’s say we do a deal with a partner like that, then it makes sense to fundamentally follow them into, let’s say, five or six of the markets they are in already.”
Depending on the region, Dutton said that they make use of a master franchise model for their international expansion.
“That allows that person to sub-franchise and effectively you find someone who has legs to open 10 to 20 shops and they get the master franchise. They have got performance criteria that they got to [stick to] so they have to open those stores within a certain amount of time,” explained Dutton. “And the percentages are a lot lower. So we don’t operate, they operate – that is the trick. Your master franchisee has to be an operator, not just a funder.”