Founded in Dubai in 2005, Coffee Planet, a multi-solutions business supplying every market sector in the coffee retail chain, was honoured recently at the inaugural SME Advisor ‘Stars of Business’ Awards 2010 ceremony which was held at the Jumeirah Beach Hotel.
The awards scheme which recognises innovation, ambition and determination shown by the region’s SMEs paid tribute to Coffee Planet in the category of ‘Industry achievement for Retail’.
Collecting the award, Coffee Planet, Managing Director, Richard Jones, said, “Our biggest achievement is that we created a market segment that didn’t exist in the UAE – that is, an ‘on the go’ gourmet fresh bean, fresh milk coffee in convenient locations. It is rewarding in itself to be recognised for that,” stated Richard Jones, Managing Director, Coffee Planet.
The self service gourmet coffee model did not exist in the UAE when we set up, but having identified ADNOC and ENOC as the most widely distributed convenience stores we ran a trial and using a revenue share model we gained a foothold in 125 stores in just 18 months,” added Jones.
Today over 10,000 people drink Coffee Planet daily from one of its convenience store locations and over 4 million cups will be consumed in 2010.
Coffee Planet sees itself as a producer and distributor of great tasting coffee rather than just another chain of cafes. To achieve that it had to take control of all parts of the supply chain from ‘crop to cup’ including its own roaster manufacturing plant, direct sourcing of raw materials such as green beans, exclusive agreements on the best coffee machines and a highly trained service and maintenance department.
“Add to that during the past year we have built our own retail brand and small stores to extend our presence and we now also provide coffee machines and equipment and a variety of fresh roasted signature coffee blends to hotels, offices, other retailers and for the home market, “ said Jones.
We have built up expertise in the sourcing and roasting of coffee and are working directly with growers to improve their standards. We use technology to drive quality and efficiency such as having all of our self serve automatic machines linked by GSM modem back to our head office so we can monitor sales and performance,” he added.
However one of the main challenges faced by Coffee Planet like many start-ups has been gaining adequate finance in a market that is more used to financing huge construction projects rather than small coffee companies.
“Our turnover has grown to AED25 million in just five years. We expanded by 17% last year despite the recession and we are budgeted to grow by 25% this year. But we could have recorded significantly higher growth, with the right finance in place. It is getter better and our bank partner, Abu Dhabi Commercial Bank is now investing more into the SME sector,” said Jones.
According to Ruwad Establishment, a division of Sharjah Chamber of Commerce and Industry that supports SMEs run by UAE Nationals, last year there were over 260,000 trading and industrial companies in the UAE of which more than 200,000 (77%) were classed as SMEs and were collectively responsible for over 45% of the UAE’s total GDP.
However, a 2009 Dun & Bradstreet report estimated that loan rejection rates were between 50-70% due in part to lenders having difficulty gaining access to accurate financial statements and in rare cases the complex and time consuming process of recovering money or liquidating seized assets.
Of those polled, just 25% of small businesses used a secured loan and only 13% had used an unsecured loan, while 45% used an overdraft and 55% a letter of credit facility.
“There is little evidence today to suggest that these statistics have changed significantly since last year. But if the bank’s appetite for risk matched the entrepreneurial spirit in this country, it would undoubtedly have a positive impact on the overall economy,” said Jones.
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