South Africans are talking about U.S. coffee mega-brand, Starbucks, scheduled to open its first restaurants in the country in April, but while price is one of the most-discussed issues tracked on social media, it’s quality that consumers consider most important, according to BusinessTech.
Market research conducted by Cape Town-based BrandsEye shows how much South Africans say they’ll be willing to pay for Starbucks and what they’re expecting when the coffee shops enter the local market.
BrandsEye is a crowd-supported online monitoring software tool that tracks, measures and reports online brand conversations, according to the company’s LinkedIn profile.
South Africans say what’s important about Starbucks is quality first, followed by the in-store experience, product mix and brand status. Price is No. 5, according to the BrandsEye report.
South Africa’s first Starbucks coffee shops are set to open at the end of April in Rosebank, Gauteng, and the Mall of Africa in Midrand, Reuters reported.
The South African market is ready for Starbucks’ expansion across South Africa, said Starbucks’ local licensee Carlo Gonzaga, CEO of Taste Holdings, VenturesAfrica reported. “We think the South African market can, right now, take about 150 Starbucks stores.”
However, Gonzaga said Thursday that the expansion will be gradual with about 12 to 15 outlets opened in the next two years.
South African coffee consumers are divided, BusinessTech reported. They’re excited about such a big brand coming to South Africa but concerned about price and quality.
To gauge South African expectations, BrandsEye used social media to track and analyze consumer sentiment towards Starbucks and other local coffee brands.
They found that Starbucks’ South Africa entry increased conversation about local brands as well as the U.S. brand.
Some fans of artisanal coffee brands said they are unwilling to pay the high prices Starbucks is famous for. Other said they wouldn’t mind splurging for its novelty blends.
Overall more comments were positive than negative about Starbucks — except in Cape Town, where 33 percent of consumers expressed negative sentiments towards the brand, versus 26 percent who were positive, BusinessTech reported.
By comparison, Durban is the most positive towards Starbucks (43 percent positive vs 17 percent negative), while Gauteng is somewhere in between – but more positive (33 percent) than negative (18 percent).
Based on its results, Durban would be the next logical city for Starbucks to head to, BrandsEye suggested. Cape Town would prove to be a resistant market.
When it came to price, sentiment toward Starbucks was negative. A lot of South African consumers said they’re unwilling to spend more than 25 rand ($1.64) for a cup of coffee. Local brands offer high-quality products for up to R28 ($1.83) a cup. Starbucks is expected to charge up to $3.25 a cup, according to BusinessTech.
Some South African coffee fans said on social media that they thought local brands – especially artisanal – were of higher quality and more affordable.
However, Starbucks’ novelty blended beverages excite them.
“Despite initial concerns as to what Starbucks would charge per cup, price only ranked fifth … but (it was) also linked to quality,” BrandsEye said, according to BusinessTech.
Starbucks has over 22,000 stores globally, including two other African countries — Egypt and Morocco. It will meet fierce competition in South Africa from local coffee brands and vendors, VenturesAfrica reported.
Starbucks said it will serve its espresso roast blend of coffee sourced from Africa, along with other coffees from around the world.