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Jakarta Post

String competition brewing in café business

Coffee time: People enjoy their coffees during their leisure time at a popular cafe franchise in Jakarta

Tassia Sipahutar (The Jakarta Post)
Jakarta
Mon, June 17, 2013 Published on Jun. 17, 2013 Published on 2013-06-17T09:55:42+07:00

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span class="caption">Coffee time: People enjoy their coffees during their leisure time at a popular cafe franchise in Jakarta. Coffee shops are blossoming in towns and cities across the country. JP/Wendra Ajistyatama

The competition is warming up in the café industry with new players entering the market every year.

Believing in the business'€™ potential, Syali Gestanon teamed up with Rahan Yama Gusta, to start a Bandung, West Java, café franchise in Bogor two years ago.

Syali, who knows the owner of the franchise well, and Rahan established their own café brand with an investment of Rp 50 million (US$5,057). RoomOurs offers a glass of coffee for Rp 7,000-Rp 12,000 and is frequented by university students.

'€œWe had to move the café twice. Now we are renovating our current place and hope to start afresh within two months,'€ Syali said.

Business consultant Aidil Akbar Madjid said the café business was very profitable, citing prices, Indonesia'€™s history with coffee and lifestyle as three factors that made the business attractive. '€œPeople now tend to spend more time at cafés. It'€™s part of their lifestyle,'€ he said.

Pranoto Sunarto, Indonesian Coffee Exporters and Industry Association (AEKI) deputy chairman for the specialty coffee industry, said the café business had been blooming over the past three years. '€œBut there are only four or five coffee companies that own more than five branches,'€ he said, adding that only about 260 cafés really focused on marketing coffee as their main product.

Annual national coffee consumption now stands at 200,000 tons, including 10,000 to 20,000 tons coming from cafés; it is increasing by around 8 percent every year, according to Pranoto.

Irvan Helmi and Muhammad '€œAgam'€ Abgari, co-founders and co-owners of local brand Anomali Coffee, said their coffee consumption had hit 3 tons a month from around 20 kilograms per month in 2007; when they opened their first store.

Anomali currently operates four stores in Jakarta and two in Bali and reaps about Rp 2 billion annually from its cafés and wholesale coffee bean business.

According to the duo, they established Anomali'€™s own coffee tasters in 2011 to maintain the quality.

The café hype has also proved profitable for Singapore-headquartered Bengawan Solo Coffee, which generates up to Rp 5 billion in revenues, with an annual increase of 20 percent, according to Bengawan Solo general manager Renaldi.

The company runs 46 primary outlets, which are fully owned by the company, and five other franchised outlets. The 51 outlets are located in Bandung; Jakarta; Surabaya in East Java; and Yogyakarta. It plans on opening 10 new outlets by year-end.

Renaldi said the amount of investment per outlet depended on the establishment'€™s concept, whether it be a full-scale in-line store, an island with only a few tables and a display shelf or a push cart.

'€œMore than 60 percent of our stores are in-line stores. The initial investment ranges from hundreds of millions of rupiah to Rp 1 billion,'€ he said.

Meanwhile, major player US-based Starbucks Coffee Indonesia intends to run 250 stores across the country by 2015 to grab a wider market, adding to the 89 existing ones.

'€œ[Headquarters] feels we are doing a good job and they want us to accelerate expansion more,'€ Starbucks Coffee Indonesia managing director Anthony Cottan said.

He acknowledged the company had benefited from the hustle and bustle of Indonesia'€™s big cities, operating 10 drive-thru outlets, the most in any Asian country.

In January, it opened its first train station store in Gambir, Central Jakarta, and plans to open another at Sudirman train station when the rail link to Soekarno-Hatta International Airport, west of Jakarta, is established.

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