Business: Food and Drink / Brazil
Full of beans
A clever brand recipe has created a rapidly expanding coffee chain. The question now is: how far can it go?
It’s a warm December day, the pavements are still glistening from a downpour and Mateo Garafulic is sitting on a busy São Paulo street sipping coffee with his mother. This morning they saw apartments for rent and now they are taking a break at The Coffee, a tiny hole in the wall shop on the hipster Rua dos Pinheiros. “It’s Japanese,” Garafulic says confidently. “The marketing is in Japanese and the website ends in .jp.”
He’s half-right. The sign above the door is written in both Japanese and English, and he’s not wrong about the domain extension but The Coffee is as Brazilian as samba. Garafulic’s misunderstanding is understandable but it would probably amuse Carlos, Luis and Alexandre Fertonani, the three urbane, coffee-loving Brazilians who founded the chain in the southern city of Curitiba. The brothers hit on the idea of a coffee chain after selling their former internet businesses because they couldn’t expand them quickly enough. They’ve not had that problem with The Coffee. The chain’s expansion rate stands at about two new shops a week and their portfolio includes 200 outlets across Brazil, Colombia, France, Portugal and Spain.
The Fertonanis wanted a venture that was scalable and a visit to Tokyo provided their eureka moment. Carlos was taken with the city’s tiny coffee shops, where the aesthetic was as important as the product. They decided that their new project should be enigmatic as well as cosmopolitan. “It is a bit mysterious,” says Carlos. “We imagined that people would ask if this was a brand that came from Japan or Brazil. We always wanted to be global so we thought we’d leave it international.”
The unifying aesthetic between The Coffee’s branches is unmistakably Japanese. Some feature the wood and paper sliding doors known in Japan as shoji. Others have ceilings made from suspended wooden slats or blonde wood-panelling on the walls. Natural light is used whenever possible. All rely heavily on the same clean, minimalist design. The Fertonanis’ global aspirations are also reflected in the name, which is in English, and the accompanying logo, which spells out The Coffee in Japanese. The founders’ attention to detail even extends to the bespoke font designed by Luis Fertonani.
The concept has been a hit with consumers and investors. Of the 200 shops that have opened since their first in Curitiba in 2018, about 80 per cent are franchises. Impressed venture capital firms provided €4.73m in funding in 2020 and another €6.6m last year.
The Coffee’s Pinheiros branch is typical of its outward-looking world view. In one of the busiest and most cosmopolitan blocks in the neighbourhood – there are Nepalese, Iraqi, Portuguese, Spanish and Bahian restaurants all within a stone’s throw, as well as a boutique gelateria and an artisanal charcutier – it’s a snapshot of modern São Paulo, though The Coffee doesn’t so much stand out as sneak in: it’s a head sticking out at the back of the group, catching your eye with its cheeky smile.
One reason for that is its size. Carlos says that the brand’s three pillars are “design, technology and quality coffee”. But their early days have also been defined by space – or a lack of it. The Coffee does not encourage languor. Customers either order on an app and pick up their coffee when they arrive or fill out the order themselves on the counter-top tablet. They pay by tapping their card, reducing time spent dealing with baristas. Some of the shops are so small that the staff can almost touch either side of the store at the same time. Few have seats. A lucky one or two, like the one in Pinheiros, have a bench outside. The hole in the wall format is hardly new but it’s one that The Coffee has shaken up.
“We’ve always had coffee served at the counter but they were the first with these very small places that we call nanocafeterias,” says Giuliana Bastos, an expert in coffee trends at import-export consultants IBF Trading. “They’ve innovated with the system as well, ordering and picking up without even having to talk to anyone. I don’t know if that’s good or not but it’s a very agile format and it makes sense for people who want to pick up a coffee on the go. Now we’re seeing others copying them and using the same takeaway system.”
Brazil has long been the world’s biggest producer and exporter of coffee. And Brazilians are no strangers to coffee breaks – but for the longest time, the coffee that they drank was industrial both in quantity and taste. For decades the good stuff was exported and the Brazilian Association of Coffee Industries says that until the end of the 1980s a third of the coffee consumed in Brazil was adulterated.
That has changed as Brazil has modernised. Nowadays there’s plenty of high-quality coffee left over after export and a significant market willing to pay for it. The Coffee offers three kinds of gourmet coffee, all of them Fair Trade, but there is much debate over quite how good it is. The Coffee’s White line of beans is described on its website as having “notes of almonds, caramel and chocolate, with a low acidity and elevated sweetness” – there are also Kraft and Black lines. But arguing over the taste is missing the point.
The attraction is not just about what’s in the cup but what’s over the door, behind the counter and on the app. While most Brazilian coffee companies pay homage to the rolling hills and provincial fields where much of Brazil’s coffee is produced, it is The Coffee’s aesthetic, which fits neatly in a nation with the largest number of Japanese descendants outside Japan, that takes pride of place. Their microlots (small batches of single-sourced beans) have names such as Hokkaido and Sapporo, even though they are almost all produced in the Brazilian state of Minas Gerais.
Unlike many Brazilian businesses, The Coffee’s expansion was relatively unscathed by the pandemic. Almost 700,000 Brazilians died from coronavirus and almost a fifth of independent coffee shops closed, according to a report by Euromonitor. But the company’s friction-free model allowed customers to grab a brew without breaking social distancing rules. Now people are eager to get out and socialise again, especially if they work from home. Coffee shops are an obvious meeting place and despite its spartan beginnings, The Coffee is starting to open larger premises, with seating and more comfortable surroundings.
“Coffee shops are places where people can go to share good times; it’s a happy space for a lot of people,” says Bastos. “And with so many people working from home, they want to get out and take a break somewhere pleasant. The Coffee is starting to adjust to that.”
Carlos Fertonani says that the firm is in talks to open outlets in Peru, Mexico, Qatar and China and, while they are not going to challenge Starbucks just yet, he does not hide its expansionist zeal. “The plan is to have 350 shops by the end of next year and 2,000 in five years,” he says. “It’s ambitious but we think we can do it. We were born to be global.”
Why it works:
This company’s growth has been fed a double espresso. It’s no surprise; it has combined a lean business model with a detailed aesthetic.