Recently, COFE, a Kuwait-based online coffee delivery platform, announced that it had completed a B round financing of USD 15 million led by Waed Ventures, eWTP Arabia Capital, and Alibaba. The funds raised will be used for brand building and further improvement of the coffee supply chain solutions. Waed Ventures is an investment institution under Saudi Aramco. EWTP Arabia Capital is an investment firm committed to helping Chinese companies grow their global business.
Founded in 2018, COFE has expanded from Kuwait to other countries in the MENA region, including the United Arab Emirates, Saudi Arabia, and Egypt. COFE provides users with online coffee and beverage selection, payment, and real-time delivery services through its app, leading the digital innovation of the coffee industry in the MENA region.
At the beginning of its establishment, COFE was selected as one of the "50 Most Noteworthy Startups in the Arab World" by Forbes Middle East. Catalyzed by the epidemic, the COFE App became one of the top 10 most downloaded food delivery and restaurant applications in Saudi Arabia in 2021.
From a global perspective, the MENA region is an important market for coffee consumption. In 2023, the per capita coffee consumption in Gulf countries is expected to reach 1.78 kg, 82% higher than the global average. According to Statista's predictions, the coffee industry in countries such as Saudi Arabia will continue to grow at an average annual rate of about 10%.
As a beverage with strong social attributes, coffee consumption offline in the MENA region is well-developed. Taking Saudi Arabia, the country with the largest population in the region, as an example. According to the data from the World Coffee Portal, the number of branded coffee shops in the country increased by 18.5% in the 12 months starting from February 2022, with more than 3,550 branches. There are more than 8,800 branded coffee shops in the entire Middle East, and it is expected to reach 11,840 by 2027.
In wealthy GCC countries, there is a wide range of coffee brands available, such as Starbucks, Costa, and Tim Hortons. In addition to these international brands, many local coffee chain brands are also present. In October 2022, Dunkin' Donuts opened 30 stores in Saudi Arabia in one day and plans to operate over 600 stores in the country by the end of that year.
The dual factors of food culture and industrial development have prompted governments and enterprises in the Middle East region to participate in the coffee industry. In 2022, the Saudi government launched the "Coffee Year" campaign to promote local coffee consumption. The Saudi Public Investment Fund (PIF) plans to invest SAR 1.2 billion (equivalent to USD 320 million) in the next ten years to develop Saudi Arabia's coffee industry and establish the Saudi Coffee Company. The company aims to support domestic small and medium-sized coffee growers and build a complete coffee industry chain, increasing Saudi Arabia's annual coffee output to 2,500 tons and making it a leading global coffee producer.
Due to the lack of supporting ecosystems such as online payment, local delivery, and digital systems, the online coffee service in the Middle East has been relatively backward for a long time. With the increasing penetration of mobile internet and e-commerce and the improvement of infrastructure, coupled with the epidemic limiting offline travel and gatherings, citizens' demands for buying coffee online have become stronger, creating a favorable environment for COFE's growth.
At present, the COFE App has presented more than 1,000 coffee brands, including Costa Coffee, Dunkin', Caribou, Gloria Jeans, The Coffee Bean & Tea Leaf, and many small independent brands. In addition to ready-to-drink coffee, users can also purchase coffee beans, machines, and other brewing accessories on the platform, showing a trend toward vertical e-commerce platforms. In addition, COFE provides digital technology solutions for suppliers, including online store management and maintenance, marketing tool development and operation, etc., which will drive the local coffee industry to accelerate its digitization.
Saudi Arabia is one of COFE's key markets. In March 2022, the company acquired the digital subscription platform Kaffeen to expand its customer base in Saudi Arabia. Later that year, COFE became an official partner of the Riyadh Coffee Season, hosting seven COFE stores at the event. In early 2023, COFE partnered with the Saudi Coffee Company and gained strong local support.
Jerry Li, the founder of eWTP Arabia Capital, said, "COFE is one of the few digital players focusing on the Middle Eastern coffee market. They have built a brand and merchant network with scale effects in the area through their free travel delivery platform. Next, the company will actively explore on the industry chain side, including cooperation with suppliers such as the Saudi Coffee Company to strengthen coffee supply chain construction."
Regarding the prospects of the Middle Eastern coffee industry, Jerry said, "In Saudi Arabia, for example, the average annual consumption of coffee per capita is about 25,000 tons, but only about 800 tons are produced locally. This huge gap will create a large number of commercial opportunities. With industry-leading technology and resource networks, COFE is expected to contribute to the upgrading and development of the industry."
At this critical stage, the ESG2023 "the US Sub-Forum" will be held in Shenzhen on June 2, 2023. EqualOcean will invite the representatives of academic institutions and investment institutions, as well as company leaders, from the International Studies Institute of Fudan University, Sun Yat-sen University, Jinan University School of International Relations, Gaorong Capital, Vision Plus Capital, FreeS Fund, ZWC Partners, Source Code Capital, Niu Technologies, TikTok, SHEIN, NEIWAI, miHoYo, Tuya, MINISO, Dreame, Ecovacs, WYBOTICS, Lifen, and UniUni.EqualOcean analysts will also release the US Report 2023 at the US Sub-Forum, summarizing business opportunities and best practices for expanding into the US market in the new stage. Click the link to apply and scan the QR code below to learn more about ESG2023.