June 1, 2020

Understanding The Middle East’s Flourishing Coffee Market

The Middle Eastern coffee market is experiencing a skyrocketing growth in imports and its younger generation is pushing a specialty coffee scene. Yet the region’s coffee culture is not like that of North America, Europe, or Australia – and those hoping to take advantage of the market opportunities will need to understand the differences in order to see success. 

To gain more insight into the region, I had a chat with Maria Eduarda Pavani of Tres Marias Coffee in Dubai. Her company supplies the region with green beans from Ally Coffee, private label coffees, and barista training. 

Lee este artículo en español Comprendiendo el Creciente Mercado Del Café en Oriente Próximo

Coffee sample being roasted.

A New Market With Immense Growth

“The coffee industry in the Middle East is growing very fast,” Maria says, stressing the demand for coffee “in all forms – green coffee, roasted coffee, and coffee beverages.” 

She tells me that “in the United Arab Emirates, this demand started probably 10 years ago.”  Now, it has what she considers a “mature” coffee culture.

According to the ICO, Saudi Arabian coffee imports rose by 42.8% between 2008 and 2018. Turkey saw a 192.8% growth, while in the United Arab Emirates, it was an incredible 249% increase. 

These are startling statistics: during the same period, US and Japanese imports grew by just 19% and 6.8% respectively. And with the exception of the UAE, the re-export of coffee in the Middle East is low – meaning we are seeing striking increases in consumption and interest throughout the region.

Focusing on just the percentage growth could bias our view of the overall consumption pattern – after all, the US was consuming over 26 times more coffee than Saudi Arabia back in 2008. Yet the growth is worth noting and explains the fledgling interest in the region.

Maria believes that Saudi Arabia’s burgeoning coffee consumer market plays a big role in recent growth, saying that “a new era” has begun. “It is a huge country with a population of over 32 million, and a couple of months ago, they took an important step,” she says. She is referring to the relaxing of regulation that previously required businesses to segregate their male and female customers. While many businesses still segregate, others are relaxing the rules. And as Maria says, “as an official dry country, this socialization is happening around the coffee shops and coffee houses.”

Yet even before this change in regulation, the importance of the coffee market was not to be underestimated. In February 2019, the Dubai government invested US $35 million in building a DMCC coffee center. The 7,500m² space features an SCA Training Campus, a coffee quality lab, and cupping labs. It’s anticipated to handle up to 20,000 tonnes of green beans annually, at a projected value of US $100 million.

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Green coffee bags in a warehouse.

A Tale of Two Coffee Traditions

What sets the Middle East apart from other regions is its rich coffee traditions that evolved prior to European coffee cultures and still exist today. Maria tells me that coffee is “almost a language” in Arabic culture. 

In fact, qahwa, the Arabic word for coffee, is the root of the words we use today: “coffee” and “café”. And while there is no denying the social role that coffee plays in most countries, the coffee-drinking etiquette of the Middle East is complex and deeply entrenched.

“If you go to visit an Arabic friend, they will make sure to serve you Arabic coffee,” Maria tells me. “Once you finish your cup, if you want to be served again, you should shake your hand with the cup, meaning ‘I would like to have more.’ Or, they say that if you are not welcome somewhere, they would just not refill your cup of coffee and that would be the message delivered.”

Today, the region has a hybrid coffee culture: one in which traditional Arabic culture holds influence but so do Western-style cafés with their filter coffee. “The young generation really loves specialty coffee, the whole aspect of it: the product, the experience, and also the ‘hanging-out’ factor in coffee shops,” Maria says. “Many people living in the UAE are expats as well, so a lot of them already know specialty coffee from their [home] countries or previous experiences.”

Yet that doesn’t mean we should overlook the relevance of traditional culture. As Maria says, “if someone drinks specialty coffee, it does not mean that they won’t drink Arabic coffee.”

It’s also important to consider the influence of two distinct Western coffee traditions: third wave and second wave coffee. “The region loves sweet coffee,” Maria says, highlighting Spanish lattes, pistachio lattes, and saffron lattes as particularly popular drinks. Spanish lattes are made with a mixture of condensed and regular steamed and textured milk, meaning it is sweeter than a regular latte, while most flavoured syrups for lattes are very sweet.

Successful coffee shops often cater to a range of palates, Maria tells me. While “there are some coffee shops that have really extraordinary single origins,” she could “probably count on one hand” the shops that just offer third wave drinks. 

With consumers drinking “six to ten cups a day,” competing coffee cultures often just add variety to people’s lives.

Espresso and milk beverage.

Middle Eastern Tastes For Specialty Coffee

Maria tells me that “normally Arabic coffee is made with Ethiopian Harar and Yemeni coffee is also very popular.” Saudi Arabia was the second-largest buyer of Ethiopian coffee in 2017–18, importing 16% of the country’s total exports. Only Germany, with a population nearly three times the size of Saudi Arabia, bought more Ethiopian beans.

Yet with the rise of specialty coffee, Brazilian beans have become a “bestseller,” according to Maria. “Most of the cafés will have two hopper/grinders, where they would offer Brazil and a second origin that would be normally Ethiopia, but it could vary,” she says. 

According to the Arab-Brazilian Chamber of Commerce, countries in the Middle East were some of the fastest-growing importers of Brazilian coffee in 2018–19. Imports to Lebanon and the UAE grew by 24.5% and 21.8% respectively. Overall, the region saw a 4.9% increase, with Lebanon, Syria, and Jordan as the biggest buyers.

Yet it’s not just about Brazilian beans. Maria tells me, “Clients love to experiment as well, with other origins, different experimental processes, and anything that is new.” 

In a relatively young and curious specialty coffee market, consumers approach the coffee menu with open minds. They might return to their favourites, the Brazilian and Ethiopian beans, but they’ll happily sample whatever else is on offer.

Two bean hoppers with different coffees at a coffee shop.

Understanding The Middle Eastern Coffee Entrepreneur

A rapidly growing market creates new business opportunities, but it’s not easy for entrepreneurs to succeed. Maria tells me that “micro-roasters are popping up everywhere” but the high cost of business in the UAE means that they either need to see exponential growth or run the roastery as a side-business.

Entrepreneurship is growing more common across the Middle East, yet it’s still a relatively unusual career path. Between 2013 and 2018, the number of startups in the MENA region increased by 48% – but they make up just 0.3% of companies overall, compared with the OECD average of 6.9%. Rates of business ownership across Saudi Arabia and the UAE are roughly half that of the US and UK. 

One of the main barriers is funding, yet that is starting to pick up across the region. In 2019, there was a 31% year-on-year growth in the number of investments made in new businesses, with a 12% rise in value. Most investments happened in the UAE, followed by Egypt and Lebanon, while Saudi Arabia saw marked increases. Although most of these investments were in financial technology or e-commerce, there is a sense that now is a good moment for those who have been dreaming of setting up their own coffee business. 

For those who have already taken the plunge and proven successful, expansion is also an option. The café-roastery is an increasingly common model. “A lot of coffee shops are growing and expanding so they see the need to open their own roastery to produce their own coffee shops and open a new line of income by selling B2B,” Maria explains.

Although there are challenges, Maria feels optimistic about the future of coffee entrepreneurs in the region. “I think the market is open for new opportunities, suppliers, and coffee professionals,” she stresses. 

The Middle East has long stood apart from the rest of the specialty coffee market, thanks to its distinctive coffee traditions. Yet cultural changes, expat influences, and increasing exposure to specialty coffee have led to a vibrant and varied café industry, as well as a growing number of roasters.

The region has its own characteristics, from the interest in Brazilian and Ethiopian beans to the challenges of business ownership. Yet one thing is for sure: it is a player on the world market and its influence is only going to grow.

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Written by Sunghee Tark. 

Image credits: Diego Nájera, Meklit Mersha, Neil Soque, Tres Marias Coffee

Please note: This article has been sponsored by Ally Coffee.  

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