Starbucks to get more Colombians drinking coffee, rival hopes

BOGOTA Fri Aug 30, 2013 11:33am EDT

A barista pours a drink at a newly designed Starbucks coffee shop in Fountain Valley, California August 22, 2013. REUTERS/Mike Blake

A barista pours a drink at a newly designed Starbucks coffee shop in Fountain Valley, California August 22, 2013.

Credit: Reuters/Mike Blake

BOGOTA (Reuters) - The Juan Valdez cafe chain, owned by farmers and beloved by Colombians, expects the imminent arrival of Starbucks Corp to help it boost surprisingly low consumption of the beverage in a nation that grows much of the world's tastiest arabica.

The Seattle-based coffee chain will open about 50 stores serving Colombian-only coffee in the Andean country in five years starting in 2014, it announced this week. The company is already the single-biggest exporter of coffee from Colombia.

Hernan Mendez, head of the 10-year-old Juan Valdez chain, said the novelty of Starbucks could help turn more Colombians into coffee drinkers given meager per capita consumption below 2 kg (4.4 lbs) a year - about a fifth of what Nordic nations drink.

"It's ironic that in a country that produces such good coffee, that consumption is so low," Mendez told Reuters in an interview in Colombia's capital, Bogota, two days after the Starbucks announcement.

"There's good economic growth and ... even though we are a coffee producing country, consumption per capita in Colombia is very low so I think there is room to have Colombians drink more coffee and Starbucks can help achieve that," he said.

Despite new competition, Mendez expected strong patriotic loyalty to the Juan Valdez chain which sports a beige and burgundy color scheme and ubiquitous sketched images of Valdez, a fictitious coffee farmer standing beside his mule, Conchita.

"Of course they will want to try the Starbucks experience because it's something new but ... we are very comfortable that our model is much more in tune with Colombian preferences," Mendez said.

The Juan Valdez character, conceived in the 1950s as a marketing emblem for Colombian coffee has gained the affection of Colombians, as a wholesome icon representing the work ethic and love of nature in a country whose image has been blighted by decades of guerrilla warfare and cocaine trafficking.

The chain, which open its first store in December 2002 and has 170 stores across Colombia and 64 abroad, including New York and Miami, pays royalties of 3 to 5 percent on the coffee it sells, funding programs that benefit growers.

Despite the exotic menu typical of premium coffee stores including cappuccinos, macchiatos and frappes, about half of the coffee sold in Juan Valdez stores is the simple "tinto" or brewed strong, black coffee, Mendez said. He said iced and other cold coffees had proven a popular among young people who previously were not regular coffee consumers.

The fact that Colombia's coffee landscapes are so diverse in terms of climate and altitude makes it possible to serve 100 percent Colombian coffee without having to blend in beans from other countries to achieve desired flavors, Mendez said.

Colombia and the world's biggest coffee producer, neighboring Brazil, have for years tended to export their good quality beans and drink remaining lower quality produce but consumers have grown more demanding as chain stores and in-vogue home espresso makers introduce palettes to gourmet brews.

"The thing about Juan Valdez cafes is that we created premium coffee in Colombia. Today, if you look in the supermarkets, you will always find premium coffees ... that you wouldn't find years ago," Mendez said.

(Editing by Marguerita Choy)