The Impact Of Starbucks On Coffee Market And General Economy In South Africa

With over 27 000 stores worldwide, Starbucks is an International brand that has taken the coffee market by storm. South Africans have warmly welcomed this franchise and are overjoyed to have this International franchise in the country. As a coffee lover, I was thrilled to hear that Starbucks will be opening a store in Durban towards the end of 2017. Besides the brand recognition, Starbucks brings many benefits to our country such as an increase in tourism, a healthier GDP and a lower unemployment rate.

It has a huge impact on the coffee market in Durban. Despite being the cause of a few local coffee shops closing down, Starbucks gained a huge positive reaction from South African consumers as well as the economy.

Consumers were overwhelmed when Starbucks first launched their South African store in early 2016. People no longer had to wait to go overseas to enjoy the caffeine infused drinks. This brand brought an overseas luxury to our country. I reacted as most people did…overly enthusiastic and excited to have an overly priced cup of coffee that was from the famous “Starbucks”.

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Seeing as it is such a recognized brand overseas, people anxiously waited in queues for over an hour just to get the brand experience. However, I was unwilling to wait in a line for an hour just for a cuppa java. I preferred to wait till the craze died down to get my taste of Starbucks. Many South Africans who have not had Starbucks before, were keen to try it having heard only positive thoughts about it.

Furthermore, the coffee market in South Africa has created a culture where people need a cup of coffee before they can start their day. Therefore it has created revenue streams for other firms, such as food-based chains, pubs and supermarket restaurants. They all now serve better quality coffee in a variety of flavors. People enjoy variety because it gives them the power to customize their drinks to their liking. Starbucks is especially known for this, and for having specialty drinks during specific seasons. Personally, I enjoy this variety because I know it is constant where ever I go in the world. No matter how weird the food might be in an overseas country, you can always rely on Starbucks to have the same great taste as it is an international franchise. The stores sell many souvenirs that represents the brand in that specific country. Therefore it has become a tourist craze to collect the iconic Starbucks mugs from around the world. These little souvenirs excite people and encourages them to buy from Starbucks.

Starbucks has a huge impact on the South African coffee market. Due to its popularity, multiple local coffee shops have had to close down. Local coffee shops were unable to compete with an international brand therefore driving it out of business. This negatively affected the community as families have had to find other means of income. However, Starbucks did rectify this as their workforce is very young. Majority of the employees that are hired are between the ages of 15-24 years old. This is also currently the age group with the highest unemployment rate. Starbucks offers these young adults opportunities to gain working experience and learn new skills that will aid them in the future. Like many other coffee retailers it serves as a gateway employer, raising the productive potential of its young recruits through the training and skills that it instills. This enhances the labour market potential outcomes of the economy and that of the employees’ careers. With a growing economy, there is now a much larger group of people that can access the Starbucks brand.

As well as increasing its own revenues, the company’s innovation benefits other companies as sales for coffee machines, mugs, pods, toppings and other home consumption coffee products increase. Other coffee stores in Durban have to adapt and are likely to imitate successful new coffee and food products or store designs based on Starbucks’s innovation. The coffee market in Durban has expanded its menu into having more variety in order to still be competitive. They have gained advantage by seeing what consumers respond to in Starbucks. This allows them to make changes to their stores to better adapt to the liking of the consumer to increase sales. Starbucks also influences the prices, by increasing the price ceiling, that these coffee markets are allowed to sell at. As the country attracts more foreign tourists, the economy becomes healthier and has a positive impact on South Africa’s GDP. Starbucks’s success can then be used to expand its empire and provide a boost to its revenues in the long term. The overall impact of the brand positively effects the community around it by decreasing the unemployment rate and by providing a platform for young adults to start working.

It can therefore be seen that Starbucks has a positive effect on our economy and a lasting, beneficial impact on the coffee market in Durban. The numerous advantages that local coffee shops have received is due to Starbucks. I am not surprised that it was introduced to South Africa as we are a developing third world country that has made a lot of consumer-retail progress. Seeing as our interest lies in American fast-food chains, it made sense for the international franchise to open a store here.