Living in Peru : your everyday companion

By Vanessa Reano,
Adapted from Spanish by Diana Schwalb

Gone are the days when Abrahama Valdelomar’s Palais Concert Coffee Shop in Jiron de la Union was the point of reference for traditional Lima. Last year alone, 16 coffee shops opened in Lima. Gloria Jean's Coffee and Hollys Coffee represent the strongest foreign entries, while La Folie, Orgäanika Coffee & D'Elite and Mr. Muffin are locally-owned enterprises that stand out as delicious discoveries.

“Peruvians love to eat,” says Andrew Suk, general manager of Hollys Coffee. “In other countries the desserts in coffee shops do not reach 10 percent. In Peru, the sales reach more than 40 percent.” Consistent with what their market research revealed, the executive says they have developed 40 salty desserts and 70 sweet desserts with advice from renowned chefs. At the opening, he claims to have launched 20 sweet desserts and 12 salty ones, a mix that will be replaced shortly, after three months of gaging their customers' tastes.

Starbucks seems to bet more on the sale of coffee and that translates to their meager display of sweet and salty desserts. The Seattle firm would rather seek to consolidate its portfolio of beverages, since last July it announced the sale of wine and beer through its store format 15th Avenue Coffee and Tea. If this concept is imported to Peru, a new battlefield could emerge. It would put Starbucks coffee up against other coffee shops that also sell some alcoholic drinks — Sofa Café and La Folie, for example.

The above probably explains why, despite so many coffee enterprises, the per capita coffee consumption in Peru is one of the lowest in the Andean region.

This raises a new question: Will the local market take that big an offer? Suk, of Hollys Coffee says the menu usually defines the identity of the place. “In the stores of its headquarters in Korea, the Batata Latte (a creation of Hollys Coffee) increased sales by 7 percent,” he says. “In Peru,of the 10 people who tried it in an initial tasting, seven returned for the same.”

As a city grows, so does its coffee
“This growth is normal and goes hand in hand with the growth of the city,” says Leon Alalu, general manager of Café Café, a Lima icon in the mid-nineties. “What was once a novelty is now a necessity. In Lima's case, coffee is an excuse to eat something more.” 

Despite having only three venues, Alalu does not appear affected by the proliferation of international franchises, because although the profile of its customers also points to the high purchasing power segment, it is far from those who choose to buy only one coffee and often to go. “I do not gain anything by having a single person consuming a single coffee for four hours,” Alalu points out.

Paul Baini, business manager of Havanna Internacional, says that their main consumers are professionals over 30 who know their products as a result of knowing their brand from trips abroad. “Our business model is more like the European cafe, with greater emphasis on sweets, sandwiches and salads,” stresses Baini. However, he acknowledges the profit margin of coffee is relatively good, although the average Peruvian does not have a constant habit of drinking this beverage contrary to what occurs in Argentina or Italy.

Rolando Arellano, chairman of Arellano Marketing, highlights the business strategy of Starbucks in Peru: They increase their base of coffee drinkers by giving young people with a good consumer experience. “They do not pay 10 soles for the coffee itself, but for the snobbery that a global brand represents,” says Arellano. Thus, aspirational consumption is activated amid this coffee dynamism. The best example is Mega Plaza (in Independencia), which houses four cafés, amongst which Starbucks and Altomayo stand out.

A different example, just like the McDonald's and Bembos cafés that opened in 2007, is Zeta Bookstore, which set up a store in Plaza Norte in alliance with Cafetal, under the concept of café-library.

Mr. Juan Valdez comes to Lima
According to the announcement by Catalina Crane, president of Promotora de Café Colombia – developer of the Juan Valdez coffee shops – the firm would arrive this year in Peru under the corporate franchise format. There has been expectation for this arrival for at least three years. The United States, Canada, Argentina and several Central American countries are also on the list for Juan Valdez's expansion in 2010.

Will the coffee fever replicate the phenomenon of pollo a la brasa restaurants and chinese joints, with more than three per block, as seen in some streets in Lima? According to Baini of Havanna Café, growth will remain over time and depend on the quality of supply. Arellano, from Arellano Marketing, states that coffee consumption will expand as long as there is a stimulus around it that encourages its purchase.

tags : Lima Peru Coffee Starbucks Gloria Jean's Juan Valdez

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1 Comments

# rick Bourne says :
17 March, 2010 [ 09:26 ]

Not surprised where I roam thats all their is in life.Social habits revolve around computers,coffee,and more coffee.

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