Branded coffee shops expand across the Middle East

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The Middle East and North Africa’s (Mena) branded coffee shops market has grown 10.5 percent to 8,874 outlets in the past year.

Saudi Arabia, which named 2022 the year of Saudi coffee, is the largest market in the region, growing 18.5 percent to reach 3,556 outlets and accounting for 40 percent of all stores in the region.

The UAE is also a key hub and Morocco and Iraq are among the fastest-growing markets by outlets.

The Project Café Middle East 2023 report by World Coffee Portal said convenience has grown to prominence, with app-enabled pick-up and delivery catering to a new generation of tech-savvy and affluent coffee consumers.

Drive-thru is also gathering pace, with 30 percent of Middle East industry leaders surveyed identifying the format as a key consumer trend.

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Saudi Arabia has produced five of the largest 20 coffee chains in the region, with speciality operator Barn’s the third largest at 431 outlets. 

Major international coffee chains, including Starbucks and Costa Coffee, continue to harness demand for aspirational coffee shop experiences.

Mid-sized and independent coffee shop operators are also poised for further growth – 76 percent of consumers surveyed in Saudi Arabia and the UAE ordered from an independent café over the last 12 months. Brands include Japan’s % Arabica, France’s Café Kitsuné, and the UK’s EL&N.

However, Middle East operators have not been immune to rising inflation and supply chain challenges arising from the coronavirus pandemic and the war in Ukraine – three quarters of industry leaders surveyed believe consumers are more price conscious than two years ago.

Israel’s domestic-led market shrank 0.4 percent to 1,308 outlets, with international coffee chains still struggling to gain a foothold. Lebanon’s branded coffee shop market contracted 6.3 percent to 194 stores.

With coffee consumption deeply rooted in Middle Eastern culture, most of the region’s branded café markets are likely to achieve healthy near-term growth as consumer appetite for aspirational hospitality experiences shows no sign of slowing.

World Coffee Portal forecasts the Middle East’s branded coffee shop market will reach 11,840 outlets in 2027, representing five-year growth of 5.9 percent.

Jeffrey Young, CEO of Allegra Group, the company behind the of the Project Café Middle East 2023 report, said: “We expect growth to continue over the next three to five years as Middle East consumers build on an inherently strong coffee drinking culture to embrace a vibrant market of international brands and up-and-coming domestic operators.”