COFFEE

Mexico 2017 | AGRICULTURE | B2B

As consumers' preferences for coffee mature, Mexican coffee companies are anticipating increased demand for top-quality and specialty coffee experiences.

José Antonio Díaz
JOSÉ ANTONIO DÍAZ
General Director
José Antonio Díaz
Xavier Iturbide
XAVIER ITURBIDE
Director General
Café Barbera

What was the state of coffee culture in Mexico when Barbera first entered the market, and how has it evolved?

JOSÉ ANTONIO DÍAZ Due to changes in the market, we decided to transition from B2B to B2C in 2001. The decision was mainly for two reasons. First, our customers became too powerful. They were large supermarket chains, and it was becoming harder to make good deals with them as it became too expensive. The second reason was that more and more brands started coming in, especially after NAFTA, so the competition was getting tougher, and making deals with our buyers became harder. Therefore, we started asking ourselves how we could get people to consume our product without going to supermarkets and without putting our product on shelves. The answer was to make the coffee ready to be consumed in many places and make the product accessible for people. OXXO was the perfect match for this. At that time, OXXO had about 2,000 stores; now it has almost 16,000 stores, and our products have been successful there. In 2013, we moved to the other side of the value chain; we went to farms and cultivators. We conducted partnerships in Oaxaca and Veracruz and now have a close relationship with coffee growers. We provide them with support and technology to help them produce more coffee in the same farm with better quality. This close business relationship has given us the opportunity to buy the product directly from them

XAVIER ITURBIDE I frequently compare the coffee culture to the tequila market 25 years ago. Tequila was a worker's drink; it was cheap and had a poor presentation. But then people began to realize that the drink had an interesting history and that it was prepared with high-quality, artisanal methods. What is happening with coffee in Mexico is more or less the same thing. Around 25 years ago everyone was drinking instant coffee. With the arrival of international brands and specialty coffee, people are discovering that there is more to coffee than instant and every day more and more people drink high-quality coffee. Mexico has had the largest per capita increase of coffee consumption in Latin America. However, we still drink 10 times less coffee than Colombians, which demonstrates Mexico's potential for growth. In Mexico, people want to know exactly what they are drinking and are becoming much more discerning consumers. Very large companies are recognizing this too and developing specialty brands to fill this new demand. As a specialty drink of the highest quality, Barbera needs to teach consumers that not all coffees are created equal. This is a challenge, but people are already tasting and learning about the differences.

What are your goals in terms of expansion?

JAD We have four business models that we are working on in the coming months and years. The biggest one is the basic concept inside OXXO. We now have another concept in its early stages. We will place a barista and all the equipment necessary inside OXXO stores; we have been testing this in a number of stores for the last two years. We also expect to open around 60 new drive-throughs in the next 12 months. The fourth one is to supply to restaurants, hotels, resorts, business centers, and corporate offices. We have been developing a business model in which people can order coffee through their mobile phones and get it wherever they want.

XI In terms of franchises, this year we plan on opening two or three more cafes in Guadalajara. We want to open a number of coffee shops there and then expand into other cities. If everything goes to plan, we will open another cafe in Mexico City this year. We want to open between 35 and 40 coffee shops in the next seven years. This number may grow, but we believe a conservative estimate is more prudent. In terms of distribution, we are close to entering the retail channel with a national chain. We are also in talks with many specialty shops, boutiques, and gourmet shops because many of the people who will make our brand successful shop at these places. We want to position the brand in this way to attract a core group of consumers who can appreciate the quality of our coffee. We also have plans for deals with luxury hotels and restaurants. We expect to finalize deals with a number of large hotel chains by the end of this year. Any place that wishes to provide the very best for their customers and guests will recognize that we are the coffee of choice.