Lavazza over Hansa: Curious Kink in Consumer Preference?

Over the weekend, I dropped by at the Hansa Coffee store and cafe on Fife Road for a quick cuppa but ended up having an interesting chat with the proprietor on the difficulties Hansa faces in getting people to choose local coffee over imported ones. But firstly, lets set out biases – I love Hansa coffee (and cannot understand why people tolerate the overpriced yet mediocre coffee served at more established outlets like Barista and Coffee Bean). Hansa mainly does retail – you can find their blue and silver packets of whole bean coffee (Pure and Dark Arabica, House Blend,  Espresso Blend and Gold Blend) in nearly all major supermarket branches – and seems to be doing quite well on that front. But a key market (you’d think) of a local coffee maker – tourist hotels and restaurants – have been a struggle to break in to.

Why not source ‘local’?

In many Western countries, hotels and restaurants are increasingly using the “we serve local produce” tag line as part of their marketing strategy. ‘Local’ is the new ‘Fairtrade’. But why are Sri Lankan restaurants and hotel chains not getting on board? Many of them are proud to serve imported coffee – particularly a brand called Lavazza. Lavazza is an established and globally popular coffee brand, and if you’ve had real Lavazza, it’s really good stuff – no Italian would scrunch up his nose at it. But there are claims that the Lavazza sent to Sri Lanka is not the top-of-the-line stuff, and Sri Lankan hoteliers and restaurateurs are paying top-dollar for not-so-top-dollar coffee. Why? Because it’s “imported”. It goes back to a curious kink in the Sri Lankan consumer psyche that “anything imported must be better” (unless it’s from China). The Jetwing Group of hotels is the only major hotel chain that serves Hansa coffee exclusively and has no qualms about saying it.

Sri Lanka saw its coffee plantation wiped out due to disease, which is when the British decided to switch to tea. But coffee growing prevailed, and today thousands of farmers in the central highlands supply beans to Hansa and others. Sri Lankan coffee needs local support. I haven’t been able to convince either my mother or my aunt to move away from Nescafe and give Hansa a try. Old habits die hard, possibly. Nescafe has been the standard-bearer of “easy to make instant coffee that tastes like coffee” in Sri Lankan households for decades. So changing that won’t be easy.

Creating an identity

Maybe what Hansa needs is, simply, a bigger better bolder cafe. Creating an “aura” around a product is crucial to changing consumer mindsets and preferences. If they had a Hansa-branded coffee shop in a good location, more consumers would be made aware of the coffee that they produce. Locals and tourists alike frequent many of Colombo’s established coffee houses (like Coco Verandah), and a Hansa Coffee Cafe could lucratively latch on to the growing demand for such spots. Some good coffee-influenced desserts and ice-creams, and a small sandwich menu, could make it a popular destination. Hansa automatically gets more mileage for their Sri Lankan produce (they also produce organic chocolate). As the awareness around Sri Lankan coffee grows and more people see that it’s no worse (if not better) than the coffee they get at their other favourite coffee houses, the overall demand for Sri Lankan coffee would grow too, and preferences may shift away from Nescafe and imported Lavazza.

The mass market that finds Nescafe affordable, convenient and “good enough”, will, of course, stick to Nescafe. That’s natural. But those who are able to exercise more preference – and have hitherto patronized an imported Lavazza-serving coffee house – could be persuaded to change choice.

Enhancing the value chain – forward linkages

But its not easy for an enterprise that has to keenly focus on growing its coffee beans business to think about forward linkages. Hansa roasts and retails coffee beans – that’s its core enterprise. It doesn’t seem interested in backward linkage – owning its own plantations – and is happy to source under the “out-grower” model, under buy-back schemes from farmers. But forward linkage – yes. It is retailing its coffee through its own cafe. It’s not easy focusing on growing a coffee bean business with a coffee cafe one. But may it needs to, if it is to successfully break into the market beyond the supermarket shelves. The tourism industry is rapidly growing, and if Sri Lankan coffee can make serious headway in supplying to the hundreds of tourist hotels and restaurants, the producers and the farmers in the central highlands would win big.

But it starts with individual choice – changing current attitudes towards “imports” and “local produce”. For anyone who hasn’t tried Hansa, try it, its excellent. If it tastes world-class, doesn’t carry a price premium over imported coffee, and it supports Sri Lankan farmers and indigenous enterprises – whats not to love?

(for more about Sri Lankan coffee via Hansa, go here – http://www.srilankacoffee.com/history1.html)

(The Curionomist has also recently had Anna Coffee from Jaffna, and it was great, but it seems that not all of its beans are grown/sourced within Sri Lanka, and are instead imported – http://www.myannacoffee.com/)

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