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Starbucks in Colombia: In the land of coffee, but not coffee drinkers



The Economist

September 2, 2013

COLOMBIA is renowned the world over for is fine Arabica coffee beans. Oddly, few Colombians appear keen on the stuff. Each consumes just 1.5kg of coffee per year on average. A typical Brazilian, by comparison, glugs 6kg-worth. Americans knock back less, around 4kg, but a lot of it comes from Colombia, which is the world's fourth biggest producer. The bulk of the country's yearly production of 462,000 tonnes is destined for export. Lesser-quality imports from Ecuador and Peru account for 90% of internal consumption. But for the past decade Juan Valdez coffeeshops, owned by the powerful National Coffee Federation, which represents growers, have tried to convert Colombians to the pleasures of high-end coffee.

Modelled on Starbucks, the Seattle-based barista giant, Juan Valdez is now bracing for direct competition from it. Last week the American firm announced that it will open its first store in Colombia next year. "The arrival of Starbucks is no surprise for us," says Alejandra Londoño, a top executive at Juan Valdez. "We paved the way for them by introducing Colombians to the coffee store experience." Before Juan Valdez began opening stores throughout Colombia a decade ago "the custom of drinking coffee outside the home didn't really exist."

Starbucks's entry into Colombia follows Juan Valdez's own foray into the American company's home turf in Seattle, where it opened three shops in 2005. These have since closed but the federation still runs outlets in in New York and Miami, as well as Spain, Chile, Peru, Panama and Mexico. "We weren't trying to intrude on their turf but wanted to take advantage of the coffee culture that Starbucks had created," Ms Londoño explains.

Indeed, Juan Valdez thinks it has learned so much from Starbucks that it does not fear looming competition. And it believes stressing its local roots give it an edge—though it remains to be seen whether invoking tradition will work in a country traditionally disinterested in coffee. Starbucks isn't taking any chances. The American chain says it will serve only locally grown beans at the 50 stores it hopes to open in the next five years. This is good news for coffee growers, who have been hurt by low international coffee prices and an overvalued peso. Increased domestic sales, even to an international chain, would be a better pick-me-up even than a cup of Colombia's choicest blend.
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