By Tamara Pupic
Robert Jones, managing director of Coffee Planet, explains how he helped build the company and what it takes to thrive in such a competitive marketplace
It may come as little surprise that the Arab world is considered one of the fastest growing coffee markets in the world, with the UAE one of its most active centres.
Caffeine devotees across the UAE drink nearly twice as much of the popular beverage as anywhere else in the GCC, helping create a vibrant and diverse coffee and café scene, and providing the perfect marketplace for businesses looking to tap into the increasingly diverse and sophisticated tastes of their customers.
One such business is Coffee Planet – a UAE-grown and Dubai SME 100 ranked company which, according to managing director Robert Jones, will see the largest growth levels in its history this year.
“Last year we saw 35 percent overall growth,” he says. “At the end of Q1 this year we were up 38 percent compared to Q1 last year.”
Familiar to drivers across the emirates, Coffee Planet is well known as the brand of choice at petrol stations, but there’s much more to its success than that.
Since launching in 2005, Jones and his team have built something of an empire by stealth, gradually growing a business to be proud of, and one which many people might not even know they’ve interacted with.
“I like to say that we are like an iceberg,” continues Jones.
“Most people see us in the gas stations or supermarkets, but they don’t know that on the flight they are taking via Emirates or Etihad, they’ll be drinking our coffee. Or in the hotel where they have lunch, they’ll be drinking our coffee.
“How did we do it? Bit by bit. We’ve always been trying to capitalise on what we have, and that’s something important to any new start-up.
“It’s much easier to go from A to B than from A to M. So don’t try to do things that are too far from your current strategy.”
Almost a decade in the making, the concept for Coffee Planet was developed by Matthew Yorke-Smith, who is now the company’s operations director.
Jones entered the fray when he and his entrepreneurial family provided all of the seed capital to set up the company, officially taking up a position with the company in 2007.
“From the very beginning we took the idea basically and turned it into a business,” says Jones.
“My brother [Richard, the company’s chairman] was involved from day one in 2005, and I came here in 2007 on a full time basis to develop a business.
“The initial concept was basically to provide great quality coffee in convenient locations.
“We looked at high traffic locations but quickly moved into the supply of hotels, offices, catering companies on to developing our own cafes and taking the brand internationally.”
The rest, they say, is history.
Coffee Planet’s fully HACCP and UTZ certified roastery, which is the only one in the region, is where the magic happens. It’s where the company’s state-of-the-art equipment produces high quality coffee using only 100 percent Arabica coffee beans. And it’s one of the main reasons Jones and co have been able to gain a significant market share within sectors including commercial, retail, hospitality and aviation.
Rather than praising the qualities of the roaster, however, Jones chooses to emphasise on another aspect of the business that he values much more.
“One of the most important lessons I have learnt is that you must have the right people doing the job,” he says, while extolling the quality of his staff.
“Consider a football team – it’s not enough for a manager to just have a list of the greatest players, but to ensure each of those players is the best within their position on the field.”
During his early days in Dubai, Jones took up many of these positions himself in a bid to get to know the business and the market better.
He admits it took “quite some time” to understand and realise its full potential, but what he learnt in those early weeks and months help him and Coffee Planet to withstand the global financial crisis that was to hit a year into his tenure, in 2008.
“In 2007 it was very busy, it was the height of the economy,” he says.
“It was very important to us that every business we work with or we’re into has strong foundations.
“Credit to that is that we made it through the financial crisis, and we actually grew in 2008. We have continued our growth which has been great to enjoy although there were so many businesses which struggled and ultimately failed.”
During our conversation he explains that Coffee Planet’s commitment to research and education in the coffee sector has been at the heart of the company’s formula for success.
“We always try to be innovative – the track that we’ve taken or the things that we’ve done are showing that,” he says.
“I think it’s our thirst for knowledge in the coffee sector. I have an intrinsic love for business and I like to keep up to date in a range of different areas.
“Matthew and I are always interested in this section of the market so we are always looking for new ideas and ways to deliver more coffee.”
He pauses before explaining that their visionary approach to business has run parallel to Dubai’s work on creating standards within the local coffee industry.
“We were trying to achieve something that wasn’t done before,” he adds.
Jones also says that they set their own standards particularly high from the outset – something which has proved beneficial as the business grew its number of stakeholders, all of whom need to be satisfied.
He explains: “It is quite incredible when we talk to hotels about a coffee contract or a coffee supply because we have to satisfy the general manager who wants the best quality, the F&B manager who wants the best service, the outlet manager who wants the nicest looking machine, and the purchase manager who wants the cheapest price.
“So we have to find the right combination to satisfy all those stakeholders, and because coffee is such an integral part of so many people’s lives, everybody gets involved in that decision-making process.
“So sometimes it is tricky. I’ve seen contracts that we signed with some clients which had several signatures on them. But that’s the reality.”
He adds that the importance they attach to standards, plus their focus on innovation,has helped them battle market changes and powerful competitors.
“I think, in this market, you have to be innovative if you are a privately-owned company,” he says.
“If you are a company that’s been founded by big, local companies you don’t have to be as innovative because you are supported.
“We are privately owned and privately funded. So we didn’t get any financial support for the first three or four years to set up the business here, which is a fairly standard practice unfortunately when it comes to start-ups in this market. So we had to build a very strong business.”
On the topic of raising funds, he adds: “Capital needs should be tiered and planned so you build a strategy around the ‘how much’, ‘what fors’ and ‘whens’.”
As well as finance, Jones claims that penetrating a market which is dominated by big local companies is a major challenge.
He highlights the fact that securing locations and expanding the brand can be difficult when up against such stiff, and well-known, competition.
“We are not really competing on the same level playing field,” he says. “I have one brand to offer while they approach a mall saying ‘I’ll take 30 locations’. They have greater leverage.”
When asked whether the local regulatory framework is in favour of those setting up new businesses, he opines that it depends on the sector, but relates an experience the company underwent when they were renewing a trade license for which the specific fee had increased by almost 100 percent compared to the previous year and “with very little explanation as to why”.
He says: “Regulation is something that is quite critical to all SMEs in terms of licensing or changes that can occur quite quickly or for unknown reasons.”
That said, Jones is quick to praise government initiatives, including Dubai SME, which ranked Coffee Planet as the 77th best performing small or medium sized enterprise in its annual Dubai SME 100 index.
However, he points out that small local companies do not get enough encouragement from the private sector itself.
“In terms of supply, bigger local companies have been preferring international brands,” he says.
“Their argument is that they have international customers from all around the world and they want to work with a brand that will be recognised by their guests.”
He dismisses their point of view by explaining that in most cases customers in the hospitality sector will not even be aware of the brand of the coffee they are drinking, adding: “Maybe it’s just a stigma of being local – international is better than local.
“If you have some great quality companies in the UAE, why don’t you look at the local market first and check whether it can fulfil your requirement?
“It’s quite incredible because in outside markets we’ve been treated as an international brand while in the UAE we are often referred to as a local brand and not as much appreciated as I would like to see.”
Discussing Coffee Planet’s rivals, Jones confidently states that his company “came to the market and did it better,” and asserts: “I always say that we don’t have a direct competitor as an organisation.
“In our individual business segments we have competitors. But, as an organisation, because we are very diverse, there’s no one really that fulfils the channels that we do – all the way from sourcing and trading green coffee to the delivery and a customer’s cup.”
He again credits their innovation-oriented approach to business as the company’s fuel for success.
“We always try to compete innovatively. That’s the way in which we compete – we provide the right solution.
“We don’t provide the solution that is cheapest for us to provide, but we try to make sure that the business model is sound.”
This is possible due to their decision to continually invest in new revenue streams, which is one of the pieces of advice he offers start-ups with regards to managing their cash flow.
He says: “We don’t have an abundance of cash, but focusing and forcing your team to focus on debtors is important. Working capital is key.”
Keeping an eye on emerging markets is in line with the current trends within the local SME sector and Coffee Planet is no exception, having signed a first international franchise deal in 2008.
Jones says: “One of our ambitions has always been to create a brand in the UAE that was worthy of export. Ninety-nine percent of brands in the UAE are imported, so it was very important to us to actually create something of a standard that we are able to export from the UAE, and we’ve achieved that.
“We are focusing on emerging markets because there’s less competition, less development and we can bring something that is completely new to the market.”
Coffee Planet is already present with cafe franchise operations in six countries, including the UAE, Oman, Malaysia, Pakistan, Egypt and Qatar, as well as wholesale distribution channels in Saudi Arabia, Kuwait, South Africa, and Azerbaijan.
Recently adding a first overseas supply deal to the list, signing a deal with a retailer in the Netherlands, Jones is already looking to the future.
Plans are afoot to develop a single-serve solution, as well as enhancing their international distribution channels.
He is clearly confident of what the coming months and years hold. The reason? Simple: “Because we have a fantastic facility that produces amazing coffee.”
Coffee Planet is the best coffee in Dubai. Better than any other I've had so far. I agree with Jones, there is no reason why the big local companies should favour other international brands just because they are a global brand, and not favour them just because they are local. I think that, only those who lack the understanding of a great product themselves would use an established international brand to feel secure. But don't worry Jones, great product always wins. I believe Coffee Planet will one day be a global player. Well done. Keep up the good work.