Shokoladnitsa plans to produce bean coffee under a new brand to expand its sales channel

The decline in world prices for coffee due to a high harvest is forcing Russian distributors to think about expanding the supply of this product. Thus, the Shokoladnitsa Group of Companies, which is developing several chains of coffee shops, decided to increase sales channels for roasted beans not only in the catering market, but also in retail chains. For this purpose, the company created a new brand “Coffee Factory”. Sales of this product in retail show low margins, and to maintain optimal profitability in wholesale supplies, serious production capacity is required, experts warn.

Coffee House LLC, part of the Shokoladnitsa Group of Companies (the Shokoladnitsa, Coffee House, Wabi Sabi chains) Alexander Kolobov, filed an application for registration of the trademark “Take, Brew and Drink Coffee Factory” on September 21, discovered “Kommersant” in the SPARK-Interfax database. The Shokoladnitsa Group of Companies and Mr. Kolobov did not respond to Kommersant’s request.

Two Kommersant sources close to the company explained that under the new brand it is planned to produce grain coffee, which is now sold under the Shokoladnitsa brand in the chain’s coffee shops and supplied to other catering operators. One of Kommersant’s interlocutors explains the need for rebranding by the planned increase not only in supplies to other coffee shop chains, but also to retail stores.

Rebranding will allow expanding sales channels, says Ramaz Chanturia, general director of the Roschaykofe association. To do this, according to him, it is necessary to get rid of the association with Shokoladnitsa coffee shops and not confuse the consumer with the word “Chocolate” in the coffee brand. For third-party customers, a more neutral name is needed, agrees Franshiza.ru expert Anna Rozhdestvenskaya.

The founder of the One Price Coffee chain, Sergei Rumyantsev, believes that the Shokoladnitsa brand is already outdated and it is difficult to sell coffee under this brand to newly opened coffee shops, which are the main customers. To maintain the profitability of coffee roasting at an acceptable level, it is necessary to ensure a significant volume of purchases and have serious production capacity, warns Mrs. Rozhdestvenskaya.

Currently, there is a favorable situation on world markets for coffee importers. According to USDA forecasts, in the 2023-2024 growing season, global coffee production will increase by 2.5%, to 174.3 million bags, due to a 6.9% increase in the Arabica crop. In Brazil, the ministry expects the collection to increase by 14.5% year on year, to 67.9 million bags. Against this background, exchange prices for coffee are also declining. According to IFC Market, on October 2, the price of the Arabica variety was $150 per 100 pounds (45.35 kg), down 28% year-on-year. Overall, coffee futures are down 18-19% year-on-year since the start of 2023.

The low cost of coffee production allows industry companies to offer competitive prices to consumers, notes Ramaz Chanturia. Including due to the wide range of coffee in retail now, according to Sergei Rumyantsev, the profitability of product sales in retail chains shows low margins.

In addition, sales of natural coffee in Russian stores are now declining. According to NielsenIQ, in June 2022 – May 2023, in volume terms they decreased by 19% compared to the previous 12 months, but in monetary terms they increased by 1.9%. Coffee buyers have begun to shift their focus to ordering this product online. Thus, according to NielsenIQ estimates, from March 2022 to February 2023 in the bean coffee segment, 24.1% of sales in monetary terms come from e-commerce. In particular, large packages are in higher demand in the online segment, as a result of which grains weighing 1 kg have become the most popular, the company points out.

Daria Andrianova