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Caribou Coffee getting its retail mix right

Dubai: The premium coffee chain operator and the second largest in the US after Starbucks, Caribou, is finally brewing the right mix of locations across its Middle East network.

“In the past there was an issue getting the right locations as Caribou was not a known brand compared with some of the other names already present here … that’s changing now,” said Hamad Al Sayer, managing director at Al Sayer Retail Est, a Kuwaiti group which has the regional franchisee rights. “But I agree that we have to be much faster with our retail presence rollout.”

Even while facing down scepticism from prospective landlords, Caribou has still managed to plant a presence in 140 locations and which Al Sayer wants to raise to 170 outlets by 2015. That could be anywhere from a 1,000 square metre supersized outlet to a 16 square metre “condensed area”.

All of the leading international coffee chain brands are in expansion mode, with Tim Hortons being particularly aggressive in seeking out new locations. Of late, local F & B groups such as Diamond Hospitality have also been experimenting with slightly more upscale café concepts, while the Danube Group, primarily into building materials, intends to steam ahead with the Cha Cha Chai tea outlets.

“Tim Hortons coming in shook up the market radically and showed there was potential for new offerings within premium coffee options,” said Al Sayer. “For our expansion, we intend to be aggressive, but will not commit to any location that does not make economic sense — we are not interested in losing money.”

Interestingly, there is a Gulf flavour to Caribou Coffee’s back story. The Bahraini bank Arcapita held a stake in the entity until late 2011. More recently, in December 2012, Germany’s Joh. A. Benckiser Group (JAB) announced a merger under which an affiliate acquired Caribou for $340 million. JAB’s other interests include upscale labels such as Bally and Jimmy Choo.

“Under JAB’s ownership, there’s a clear mandate to grow the Caribou brand and have enough allocations to support those expected growth levels,” said Al Sayer. “Saudi Arabia and Turkey represent the biggest opportunities to take the brand forward — we already have 25 locations in Lebanon.

“There could be other F & B concepts Al Sayer Retail could take up … but again it will be a gradual step. We are not interested in being a brand collector.”