Economy, Business And Markets

Giant Brands Conspicuous by Their Absence

Domestic Economy Desk
Giant Brands Conspicuous by Their Absence
Giant Brands Conspicuous by Their Absence

Besides watching “barista championship” and learning how to make “a perfect-tasting espresso” by a Rome-based expert, coffee lovers attending the Coffee and Tea Exhibition 2015 held at Tehran’s Goftegou Park on September 1-4 were surprised by the absence of prominent international coffee brands in Iran such as Nestle’ and Klassno.

The reason according to a sales expert at Illy Café, an Italian roasting company specialized in the production of espresso, may be that those brands have already secured their share in the market and see no need to take part in such exhibitions.

Nestlé and Future Enterprises (producer of Klassno) were leaders of Iran’s coffee market in 2014, accounting for 23% and 22% of sales respectively, due to the popularity of their Nescafé and Klassno brands, especially in instant coffee mixes. Their leading positions were mainly attributed to their strong brand images and efficient distribution, especially in key urban areas in Tehran.

Global prominent coffeemakers, according to Euromonitor International—a global independent provider of strategic market research—are in a not-so-tough competition with a new Iranian coffeemaker Multi-Café, specialized in making instant coffee for the most part. Multi-Café was absent in the exhibition as well.

Competition in Iran is not much of a concern for global coffee giants as the fledgling domestic coffee industry is toddling with the establishment of a few firms in the south of the country. Iranian coffee manufacturing companies started their business in Iran more than 10 years ago, Mohammad Najjari, sales manager at Khandabi Machinery, representative of Turkish producer of coffee-making machinery Topper, told the Financial Tribune.

The industry has kept growing in recent years to keep pace with the increasing demand for coffee among Iranians which, according to Najjari, is correlated with the soaring usage of Internet and social networks among young Iranians over the past years.

That explains trending hashtags such as #ghahvenegar (coffeegram in Persian) on Instagram including pictures of youngsters showing off their hip sense of fashion and enjoying their coffee in cafés across Tehran.

Youth interest in going to cafés serves as another major factor benefiting the coffee industry, said Hadi Valipour, sales expert at RCL which is the company representing La Cimbali, manufacturer of professional espresso and cappuccino equipment based in Italy.

Although café owners have seen a drop in sales due to a hike in coffee prices in 2013 mostly due to increasing costs of import due to sanctions on Iran’s nuclear energy program, experts believe coffee shops could help the coffee industry emerge in the upcoming years.