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Coffee at Kuwait City's Kuait Towers
Coffee at Kuwait City's Kuait Towers

KUWAIT CITYJuan Valdez coffee shops, as familiar in some Latin American cities as Starbucks is elsewhere, opened their first franchise shop in Kuwait this month. The inauguration heralds the firm's arrival in the cash-rich market of the Middle East, a region also believed to be key in cultural and branding terms.

The chain opened its new 100-square-meter shop inside the Symphony Mall in Kuwait City's exclusive Salmiyya district. Juan Valdez is aiming to have 60 shops in the Middle East-North Africa region in the coming years, with an emphasis on Persian Gulf states. After Kuwait, the next locations are slated for the United Arab Emirates, home to the highest number of international franchises in the region.

The local partner here is First Source General Trading and Contracting Co., part of the Al Ghanim group. The Kuwait-based group has operations throughout the region with many years of franchising experience, notably in the up-market clothing boutique business.

At the Kuwaiti inauguration, president of the Colombian coffee growers' federation Procafecol Hernán Méndez declared himself "very optimistic about our presence in this new region of the world" following what he called "intensive" preparations.

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A Juan Valdez cafe" in Bogota (MarioRDO)

He said Colombians would be sent to train local staff. "We have committed and professional partners who will be part of our success," Méndez said. "I am certain we shall leave our mark on this market."

Juan Valdez now has 242 shops, including the newest in Kuwait, and 170 in Colombia, and 71 in other countries including the United States, Chile, Ecuador, Mexico and Panama. Its shop in Madrid's upmarket Salamanca district has recently closed, as Spain is left behind just as the focus shifts to the Middle East. The chain is aiming to reach 250 shops worldwide by year's end, with Latin American openings planned in Guatemala, El Salvador, Costa Rica and Bolivia.

Market potential

The Colombian coffee brand arrives in a region with enormous business potential: Mideast consumers have notable purchasing power, and imported coffee brands are widely sought out. Hot beverages are popular, and coffee shops are considered a central social meeting point in countries where alcohol is not consumed for cultural and religious reasons.

Figures from Euromonitor show that the Middle East-North Africa coffee market is currently worth in excess of $4 billion, and is expected to grow around 5.5% by 2017.

In terms of overall economic potential, three of the 15 richest countries listed in Forbes and six of the World Bank's top 50 countries for doing business are in Middle East-North Africa. To offer some perspective: United Arab Emirates' per capita GDP is $49,800, more than four times that of Colombia.

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