Starbucks could brew Kenya’s coffee industry back to life

Starbucks, the world’s biggest coffee chain could see the trending fake news of it opening an upmarket roastery and cafe in Kenya, as an opportunity to realise its African expansion dreams and a plea from Kenyans to pitch an espresso tent in the East African market, starting with Kenya.

Starbucks has since debunked the rumour but should they open a shop in Kenya, it would be a win for Starbucks and it would steer the Kenyan coffee industry towards sustainability.

The global price of coffee has continually dwindled and after reaching a 15-year low of $0.867 per pound, there was a rally towards the end of May. But this increase was short-lived and coffee has once again begun trading below $1 a pound, less than half of its value 5 years ago.

Last year, a lot of Kenyan farmers ditched their coffee farms to plant Avocado. Avocados flourished, business boomed but coffee suffered. With the global awareness of avocado’s health benefits and the avocado export deal the Kenyan government had with China, farmers began getting comfortable in their newfound trade; but not for long.

China began instituting tough rules, including requiring Kenyan farmers to peel and freeze the fruit before export. The new rules, in addition to the 56 steps Kenyan farmers have to take, shuttling from one government agency to another in order to get an avocado export clearance dashed all hopes these farmers had of benefitting from the avocado boom. Many had to fall back to the coffee trade.

STARBUCKS TO THE RESCUE

Kenya’s Arabica coffee is known for its sweet, dry aftertaste and a pleasant aroma. However, after 55 years of independence, Kenya is still exporting raw coffee.

Undeniably, coffee consumption in Africa is low and Starbucks’ high pricing contributed to its struggles in South Africa. Hopefully, Starbucks won’t make the same mistake in Kenya.

In Kenya, domestic coffee consumption is still at a three percent low, partly due to the predominant tea drinking culture in the country and the low purchasing power of coffee for a majority of the population, no thanks to its high pricing.

Should Starbucks, which sources its coffee beans from nine African countries, including Kenya and Burundi open an upmarket roastery and cafe along the rumoured Mama Ngina Street in Kenya’s capital, Nairobi, avocado farmers would go back to their coffee farms and Starbucks would buy coffee bean at a cheap rate in local currency, exclusive of shipping costs.

Starbucks would buy coffee beans in Kenya’s local currency and given that they would buy in bulk, they can reach an agreement with the farmers and the government. With the beans sourced locally and Starbucks flagship products – cappuccino, espresso and frappuccino made locally, the company will reduce the price of its products in Kenya.

This would grow the Starbucks business, boost the coffee drinking culture and bring more money for Kenya and Starbucks. Africa accounts for about 12 percent of the world’s coffee production and Ethiopia, Kenya and Uganda dominate the region’s coffee production, together they account for 70 percent of sub-Saharan Africa’s coffee output.

Currently, Starbucks operates more than 22,000 cafes worldwide and has a presence in only three African countries — Egypt, Morocco and South Africa.