UAE Coffee Chain Market by Regions, by Organized and Unorganized, by Food and Beverages - Outlook to 2021: Ken Research

How is Coffee Chain Market positioned in UAE?

With 3.4 million cups of coffee consumed every day, UAE has the fastest growing coffee market in Gulf Cooperation Council (GCC). The UAE coffee chain market has increased from USD ~ million in 2017 to USD ~ million in 2022 at a CAGR of ~%. There are around ~ coffee outlets in UAE. The coffee consumption increased from ~ million kgs in 2017 to ~ million kgs in 2022. Furthermore, USD ~ million was spent on coffee in 2022

The coffee chain market is highly organized with the major organized players occupying ~% of the revenue share as of 2022. The market has seen a shift from traditional coffee shops to modern coffee outlets with increased focus on ambience and customized service offerings. Moreover, the customers now demand particular varieties of coffee, certain methods of processes and particular brewing methods. Modern coffee chains are now targeting wider audience by introducing products for kids and health conscious people.

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The market is driven by growth of franchise coffee chains, rising per capita income, growing expenditure on non alcoholic beverages, growing retail, tourism and hospitality sector. With the growth of major tourism hubs, business parks and shopping complexes, coffee market has seen growing demand amongst tourists, professionals and youngsters.

Further, the market has seen rising demand for specialty coffee. This is driven by rising awareness amongst people about the process of making coffee. Moreover, there has been increasing competition with major international coffee chains entering the market along with increased number of individual specialty coffee outlets located in high end localities. The market has also witnessed innovation in terms of increased use of digital platform to gain customers, drive thru and digital display boards.

Further, green coffee is a new concept introduced in the market which claims to have health benefits

How Have the Different Segments Performed in UAE Coffee Chain Market?

The UAE coffee chain market can be segmented on the basis of major regions, organized and unorganized and food and beverages.

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By Regions: Dubai has accounted for a major share of ~% of the number of coffee outlets in UAE in 2022. Being a major economic hub in UAE, Dubai has attracted all the major organized coffee chains to set up their outlets in the city. Further Dubai has also witnessed the growth of high end specialty coffee chains and gourmet coffee shops such as Roseleaf Café, Seven Fortunes, Common Grounds and others. Further, In 2022, Dubai recorded ~ million visitors as compared to ~ million in 2015. Some major infrastructure projects include Dubai Water Canal Project, Al Habtoor City and others. Such major infrastructure developments have enabled major coffee chains to expand in these areas. Abu Dhabi has accounted for ~% of the total number of coffee chain outlets in UAE in 2022. Sharjah has accounted for ~% of the total number of coffee outlets in UAE in 2022.

By Organized and unorganized: The UAE coffee chain market is dominated by organized players which have accounted for ~% of the market share in 2022.

The unorganized sector which majorly comprise of specialty coffee shops, modern coffeehouses and coffee chains with less than 10 outlets all over UAE have accounted for ~% of the revenue in UAE coffee chain during 2022.  There are ~ organized and ~ unorganized coffee outlets in UAE as of 2022.

By Food and Beverages: Beverages which include hot and cold coffee variants, tea and other beverages have contributed to ~% of the revenue share in UAE coffee chain market while sale of food items has contributed ~% of the revenue in 2022. Coffee is the primary product focus for majority of the coffee chains in UAE and they accordingly position themselves to address audience with favorable preferences for coffee.

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Value Chain Analysis of UAE Coffee Chain Market

The UAE coffee chain is well integrated as it is dominated by organized players. The coffee beans are imported from countries such as Brazil, Indonesia, Vietnam and South Africa. The coffee plantations are either company owned or the company ties up with private plantations. There are two types of coffee namely Arabica and Robusta. Arabica requires a lot of care. It grows at ~ feet above sea level and in tropical countries where it needs moisture and heat. Robusta doesn't require much care. The green beans are sent to roasteries which are either company owned or outsourced. Some major coffee roasters in UAE include RAW Coffee Company, The Sum of Us, Specialty batch, Boon Coffee, Mokha 1450, Maison Maatouk, Coffee Planet and Common Grounds. The average price of 500g roasted coffee is ~. Subsequently, the roasted coffee beans are shipped from the main company roasters to numerous region heads. Regional heads comprise of huge storage units with advanced warehousing facilities. The country warehouses procure raw materials from regional heads. These regional heads manage all brand outlets of various countries bulked together in a region. Machines required by the outlets are stored in country warehouses. Coffee machines have undergone tremendous evolution from once being manually operated to now being fully automatic.

Other raw materials include cups, plates and cleaning material. Cups are procured from neighboring countries such as Saudi Arabia due to cost advantages.  The cleaning material required is mainly procured locally.

Trends, Developments, Issues and Challenges in UAE Coffee Chain Market

The market has seen a shifting preference for modern coffee shops where people could sit and relax with a cup of coffee. As customers have become more exposed to a variety of coffee, coffee farm information transparency and brewing methods, the demand for specialty coffee shops that focus on the use of single-origin beans (which involves coffee grown within a single known geographic origin) has increased. Furthermore, digital transformation has helped various players in industry to increase their sales by better targeting their customers. The market has seen major players adopting sustainable procurement practices. In order to do so, the coffee chains have tied up directly with the farmers located in coffee producing procuring raw materials at a fair price, thus eliminating the middlemen.

Major coffee chains have rigorously invested in new concepts and ideas to remain competitive in the market. In order to suit the busy lifestyle of the customers, many coffee outlets have introduced drive thru to increase their sales. Further, they have added a kids section in their menu to cater to a wider audience. Moreover, the coffee chains have introduced a breakfast menu targeting customers going to work in the morning. Furthermore, with the rise in number of tech savvy people, coffee chains have launched apps which support online ordering and payment facilities.

What IS the Competition Scenario in UAE Coffee Chain Market?

The UAE coffee chain market is dominated by international brands operating through franchise model. Along with organized chains there are number of local independent specialty coffee shops operating in the space. There are around ~ coffee outlets in UAE as of 2022. These chains compete on parameters such as geographic coverage, price, quality of food and beverages, services, customization, customer experience, ambience, promotional offers and brand image. These organized players have played a significant role bringing in the modern café culture in UAE. They have positioned coffee outlets as a place where people can socialize and relax along with a cup of coffee. Innovation is another factor driving the coffee sales in UAE. The coffee chains have introduced various new ideas and concept in this market such as drive thru, green coffee and localized interiors of the outlets to engage the audience better.

The 10 major organized coffee chains in UAE are Starbucks, Costa Coffee, Tim Hortons, Caribou Coffee, Caffe Nero, Dunkin Donuts, Gloria Jean's Coffee, Café Bateel, Krispy Kreme and Blends and Brews.

What is the Future Outlook for UAE Coffee Chain Market?

The UAE coffee chain market is estimated to reach USD ~ million in 2028 from USD ~ million in 2022 at a CAGR of ~%. Further the number of coffee outlets is expected to reach ~ by 2028. The market will be driven by rising population, changing lifestyles, expanding tourism and UAE's anticipated hospitality boom as it prepares to host Expo 2020 Dubai. Further, the market is expected to witness growing preference for healthy drinks thus facilitating the growth of green coffee. There is also a positive outlook in the grocery retail category with a particular focus on the convenience segment which is being pursued aggressively. The specialty coffee shops market has enormous potential for growth as increasing number of people are buying coffee based on a more informed choice and progressively more cultivated palate due to the awareness spread by roasters, specialty baristas and the owners of homegrown cafes. The major coffee chains are expected to adopt sustainable methods of importing coffee raw materials. Technical Upgradation and vertical integration of the supply chain will help in lowering the cost and increase profitability. The machinery used in the process of making coffee is expected to undergo automation, cutting down operational and manual cost.

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Ken Research is a Market Research and Consulting Firm, based out of India, Indonesia and UAE. Since 2011, we have been assisting clients globally with our Syndicate and Bespoke Market Research and Advisory Services.

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