Coffee shop brand, vida e caffé, says their next stop is Ghana
Grant Dutton, MD of South African coffee shop chain, vida e caffé, talks about the potential he sees in other African countries.
Sitting in a Cape Town outlet of South African coffee shop brand, vida e caffé, with the managing director Grant Dutton, I looked around and saw that a lot of their customers were suited business men and women, fumbling over papers with colleagues.
Sure, this particular branch was located in a corporate complex, but with the brand’s strategy of targeting corporate environments – such as their recent opening of a vida e caffé at Standard Bank’s head office in Johannesburg – I wondered if the growth in Africa’s corporate arena was one of the reasons that Dutton was so interested in expanding the brand into Africa.
“We are actively chasing those areas,” answered Dutton. “It’s a growth opportunity for us, without a doubt.”
He added that their brand, while also successful in shopping centres and retail areas, has typically done well in corporate environments. He owes this to the fact that people are often willing to go outside the building they work at in search of a quality brand of coffee. Furthermore, an established coffee shop in a corporate building can become a popular meeting point for those looking for a more relaxed environment to discuss business.
“That’s part of our strategy," Dutton explained. "So for example Ghana... it’s not the mall environment you see here in South Africa. So we say, where are the soft targets? Soft targets are these types of environments where you have massive corporates – you have 1,000 to 2,000 people in a building – there is no coffee outside of the building, no coffee inside the building, and you have got people who travel the world, they earn a certain amount of money and they understand coffee. It’s an easy fit for us.”
Dutton said that they plan to expand vida e caffé into Ghana and Botswana by the end of the year. Currently, the brand already has 72 stores in South Africa, four in Mauritius, one in Angola and two in London. Dutton said that vida e caffé, which is Portuguese for ‘life and coffee’, would like to be the first to bring a slice of the European coffee culture to African streets.
The first Angolan vida e caffé store was established just over a year ago, and Dutton said the uptake they received there was very impressive.
“Angola wasn’t just a strategic decision, it was opportunity-based. So [our partners] came to us, they found us, they courted us, and we went with them. Whereas now our expansion into Africa is strategic; so we have said we want to be there and we are actively looking for partners.”
While there are plans to further expand their presence in Angola, Dutton said that the market can be challenging, mainly because it is expensive. For example, property leases are expensive, and the logistical issues surrounding transporting fresh produce into the market can be costly too.
“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.”