Will Starbucks be a hit in South Africa?

By Pumza Fihlani
BBC News, Johannesburg


Residents of South Africa's biggest city are brand conscious and rarely need much persuasion to try something new - so many were up for tasting their first cup of coffee from Starbucks when the US giant opened its doors in Johannesburg this week.

Long queues formed outside the cafe in Rosebank, an upmarket part of the city, braving the uncharacteristically chilly April weather.

Johannesburg - which boasts a healthy black middle class with a bit more disposable income - is as good a place as any in Africa to test out a luxury brand.

It is the first Starbucks in sub-Saharan Africa and the launch party on Wednesday night was attended by many city socialites.

Those who waited outside, some overnight, for the public opening the next day took selfies which they posted on social media - and #StarbuckSA trended on Twitter for most of Thursday.

Cousins Tsholo Moncho and Keabetswe Kgantisoe, who live in Boksburg about 30km (20 miles) away, made the trip just for the opening.

Image caption,
Cousins Tsholo Moncho and Keabetswe Kgantisoe were eager to savour a Starbucks

"I had my first Starbucks on holiday in England and I'm so happy that they've come here it's about time," says 18-year-old Ms Kgantisoe.

Ms Moncho said she had never tried a Starbucks before and was full of anticipation.

"Keabetswe dragged me here and I can't wait to try it. I really wanted to be one of the first people to have a taste," the 28-year-old says.

But some on social media did not get what the excitement was about, saying they preferred other chains or complaining about the blandness of global brands.

Image source, Graeme Raubenheimer
Image source, Margie Orford

Stand-up comic Mark Palmer tried to put it into perspective by making a wry comparison with the long queues for South Africa's first democratic elections in 1994 after the end of apartheid.

Image source, Mark Palmer

Nonetheless, South Africans seem to lap up American consumer culture.

Starbucks joins Walmart, Burger King, Krispy Kreme, Dominos Pizza - who are hoping to strike it lucky too like McDonalds and KFC which have been here for many years and are well loved.

'Vibrant and growing'

Taste Holdings, Starbucks' South African franchise partner, also responsible for bringing in Domino Pizza, is optimistic about the market.

"The South African coffee market is vibrant and growing. With a growing consumption rate, this is a great opportunity to reach new customers," says the company's CEO Carlo Ganzaga.

And South Africans do seem to love their caffeine fix - a coffee culture that has changed dramatically over recent years.

They do not mind paying a bit more for a good cup of coffee and coffee shops are now a common sight in most cities.

Image caption,
That selfie moment outside the new Rosebank Starbucks

This might seem strange in a country of vast contrasts - where poverty, extreme mineral wealth and a growing middle glass intermingle.

But Starbucks seems to have positioned itself competitively with local established brands like Mugg n Bean and Nescafe.

A cup of coffee costs around $2 (£1.40) at all three outlets.

Starbucks plans to open 15 more stores in South Africa over the next two years.

It already sources a considerable amount of its coffee from farms in Africa and has franchises in North Africa - but has no other plans of expanding outlets into the rest of the continent.

Financial analyst Celeste Fauconnier says investors come to South Africa because "it has the easiest business environment to work in and has better infrastructure than some countries".

South Africa is happy to welcome companies that can help tackle unemployment, because in spite of being the continent's most industrialised nation - 25% of people are jobless.

"With the two stores openings we have created a number of opportunities not only by employing [38] baristas but also by using local contractors and through our supply chain," Mr Ganzaga tells me.

'Enterprising Africans'

But some are worried that a second "gold rush" in South Africa by global corporations, and even China, could hamper the country's recovery from decades of white minority rule.

Image caption,
Anyone for a Frappuccino? South Africans are open to trying something new

So how can local industries be protected while opening up to world markets?

"The retail sector here is still largely informal so there is no threat that it will be overtaken by the companies looking to establish businesses here," says Ms Fauconnier.

"Big retailers coming in will however put pressure on entrepreneurs but Africans are known for being enterprising and will find ways around any challenges posed by the new competition."

One of the biggest challenges for small South African businesses is funding, in spite of some government schemes.

Banks are largely risk averse when it comes to start-ups and some argue big international firms with capital may have an unfair advantage.

But as Starbucks is not cheaper than the local competition, it will still have to work to win a place in the hearts of South Africans.

And with their developing taste for the finer things in life, they are happy to be wooed. Anyone for a Frappuccino?

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