UAE’s coffee HQ

As part of a greater movement to establish Dubai as a trading epicentre, the Dubai Multi Commodities Centre (DMCC) inaugurated its new 7500-square-metre Coffee Centre in late February at the annual Gulfood international food and beverage expo. Conceptualised in 2016, the centre finally opened for operations in November 2018 after a year of planning and construction. The state-of-the-art centre is located adjacent to the DMCC Tea Centre in the Jebel Ali Free Zone. Deemed the “world’s flagship Free Zone”, the DMCC was built to spur and support a global marketplace for commodities, while driving trade through Dubai. The new Coffee Centre will further that mission with a focus on the global coffee supply chain and its strategic location between major coffee producing and buying countries. “The DMCC Coffee Centre will connect the fast-growing, high-value consumer markets in the Middle East and Europe to some of the world’s major coffee producing nations,” says Executive Chairman Ahmed Bin Sulayem. “It will benefit a wide range of stakeholders, [from] coffee farmers to retailers. We are confident that the centre will create infinite new trading opportunities and become the preferred hub for specialty coffee traders and producers.” The inspiration for the centre was also driven, in part, by Dubai’s burgeoning coffee scene and the immense success the DMCC has seen with its Tea Centre. “In the Middle East, coffee [is not only] an integral part of the history and culture, [but] also a growing industry,” Bin Sulayem tells Global Coffee Report. “This growing demand, coupled with Dubai’s strategic location and our experience with the DMCC Tea Centre, prompted us to develop the facility. Until now, the region simply did not have the capacity, equipment, or expertise to facilitate global coffee trade on this scale.” The temperature-controlled facility, which is projected to handle up to 20,000 tonnes of green coffee bean annually, offers core services including warehousing, logistics, green coffee cleaning, contract roasting, and packing. The centre houses a coffee quality laboratory, three fully outfitted cupping rooms, and a Specialty Coffee Association premier training campus, as well as five sample roasters that can accommodate specialty and commercial coffee for customers to conduct quality assessments. Even before breaking ground on the centre in 2017, DMCC was already building its coffee trade network. In 2016, it signed a major agreement with Yunnan State Farms Group and trading partner Mega Capital Halal Group to export up to 140,000 tonnes of green coffee from the Yunnan Province in China. “Dubai offers a unique trading ecosystem, including its air and maritime links, world class facilities, regulations, services, and networks and most importantly, its centrally accessible location,” explains Bin Sulayem. “From this vantage point, the new DMCC Coffee Centre is posed to connect coffee traders from Africa, Asia, the Pacific, and Latin America to the Arabian Peninsula and beyond.” That central location has opened the DMCC as a gateway for other major global commodities, including gold, diamonds, base metals, and tea. The strategic pivot toward coffee highlights the growing importance of the beverage in the United Arab Emirates (UAE), as well as the greater Middle East. Although a love for coffee has long been central to the Middle East’s history and culture, third wave coffee is taking hold in the region at a rapid rate, with Dubai at the forefront. In lock step, coffee consumption and the number of coffee shops have been climbing year over year. According to Allegra World Coffee Portal’s Project Café Middle East 2019 report, the number of branded coffee outlets in the UAE increased 8.5 per cent in the past year to 1265. “We see the UAE as one of the most sophisticated coffee shop markets in the Middle East, with Dubai driving much of the regional innovation,” says an Allegra representative. “The UAE was one of the earliest markets for western branded chains in the Middle East, which has catalysed consumer interest in café concepts nationally and across the region. Today, Dubai is home to a highly developed independent and branded chain coffee shop market and is a leading regional influencer.” Allegra attributes some of the growth in foreign brands to the large international expat population that has cross-pollinated the UAE market: “Aspirational western brands benefited from the large expat population in urban centres during the 1990s, but their popularity among local populations is crucial to these businesses today.” Dunkin was the first to debut in 1997, with Costa Coffee following in 1999, and Starbucks in 2000. Today, Starbucks, Costa, and Tim Hortons are the top three market operators by outlet numbers in the UAE, at 169, 150, and 95, respectively. Domestic specialty brands have also been popping up to tap the booming market, including Coffee Planet, Orbis Coffee Roastery, and Tom & Serg. At the same time, there is a steadily expanding pool of consumer dollars to be spent in coffee shops. In fact, coffee consumption has jumped from an estimated 1.4 billion cups per day in 2012 to an estimated 3.4 billion cups per day in 2016. “The main reason for the significant rise in coffee consumption is that consumers are becoming more knowledgeable about coffee,” the DMCC’s Bin Sulayem tells GCR. “Local and traditional coffee shops are rapidly transforming into modern outlets with a specific emphasis on ambience and customised service offerings, which is [driving] interest in specialty coffee in the UAE. “Today, the young population across the UAE has greater awareness about what specialty coffee is and they are interested in the experience that it offers. Initially, it used to be commercial coffee that set the pace for growth in the industry, but now consumers are interested in the more refined sensory experience of specialty coffee.” To gain better access to that expanding pool of coffee consumers, in 2017 Nestlé built a US$150 million factory in Dubai – its 18th in the Middle East. “It shows our confidence in Dubai and the UAE as a dynamic, stable, and competitive business hub, and our long-term commitment to the people of the Middle East,” said Marco Settembri, Executive Vice President Nestlé SA and Head of Zone Europe, Middle East, and North Africa. And in February, Italian espresso machine manufacturer Gruppo Cimbali opened its UAE headquarters in Dubai on the DMCC campus. “The new Dubai office is an important step in our Middle Eastern growth strategy,” Gruppo Cimbali CEO Franco Panno said in a statement, adding that the office allows the company to be closer to its clients in the UAE, where the company’s traditional professional coffee machines hold 30 per cent of the market. Despite the steady penetration and resulting strong competition, Allegra, which is hosting the first Europe & Middle East Coffee Symposium in Dubai in November, forecasts significant sector growth over the next five years. About 88 per cent of the industry leaders surveyed for its 2019 report believe there is still plenty of growth potential in the UAE’s branded coffee shop market. On the trade side, Bin Sulayem also anticipates continued growth in the coffee sector. “We have already received immense interest from global players looking to utilise the centre as a platform to expand their operations, in the region and beyond,” he says. “Looking ahead, we anticipate further growth in the coffee industry and, especially with the establishment of the centre, we are optimistic about increasing trade flow of coffee through Dubai, in return, boosting the national economy.” Global Coffee Report has launched a LinkedIn Showcase page. Follow HERE for up-to-date news and analysis of the global coffee industry.