Bo’s Coffee bucks foreign dominance
When McDonald’s announced plans to enter the Philippines in 1981, the fledgling Jollibee could have thrown in the towel. Instead, Tony Tan Caktiong says he visited McDonald’s stores abroad, adopted their best practices and produced food Filipinos preferred.
When Starbucks did the same in the mid-1990s, Bo’s Coffee could have closed. Instead, Cebuano Steve Benitez built his “stronghold” in the Visayas before going full blast in Manila and Luzon and is now betting that a lot of people – especially those pesky millennials – would embrace a Filipino brand. He thinks that gives him room to grow despite the lead of Starbucks and Coffee Bean & Tea Leaf and the entry of Costa Coffee. (And despite the fact that two of those are backed by two of the country’s best known conglomerates – the Rustan’s group for Starbucks and the Gokongwei group for Costa – and the CBTL group has strong backers too and a risk-taking leader. All of which must be factors in Benitez taking in an investment fund partner last year.)
Benitez moved himself, his family and the company to Manila in 2003, based in eventually cramped quarters in Pasong Tamo, Makati. They recently moved to a converted warehouse in Pasig, with test, training and manufacturing facilities on the ground floor, and an open-floor office on the second floor. It’s buzzing with young staff and a representative of his new partners, who is now CFO. Benitez sits in a small, glassed office at the center of this, where he makes me try a cup of their new coffee while talking about his start and his plans. (WATCH: What's the big idea? Bo's Coffee competes with global players)
I don’t know if Bo’s can beat the foreign brands the way Jollibee has done with McDonald’s. I’m not sure even Benitez thinks so. When I press him about competing with the giants he says “I think we complement each other.” (Fun fact: this month Bo’s will open its 100th store while Jollibee will open its 1000th Philippine outlet. Of course Jollibee’s other brands and overseas stores push its total over 3,000, each of which brings in more money than a coffee shop.)
We’ve all heard too much about those millennials (even those of you who are that young). How they support brands that support a cause. Bo’s cause is Philippine coffee. “Homegrown” is the tagline. Benitez says he is getting the best local coffee and marketing them as such, as Sagada beans and Benguet beans and Mount Apo beans and more. He talks about supporting social and local entrepreneurs, whether it’s the weaves you see on his merchandise and furniture or the chocolate bars at the counter.
“I don’t expect to convert Starbucks drinkers to Bo’s,” he says. “But there’s a market that appreciates local coffee and companies.”
Benitez says he got the coffee habit to stay awake for law school at night after a day job at Amex. He says he got into business because when he left law school, “I was looking for that stress.”
There was another route Benitez could have taken, that might have saved him some stress. He could have gotten the franchise of one of the global brands and converted his stores. He says he didn’t because he couldn’t afford it. But also because that route “stifles Filipino creativity.”
Everywhere, especially in retail and food, you see global brands take more and more of the market. There’s an inevitability about it. They have the wherewithal to innovate and invest. And partnering with them is a good route for a local businessman to take for fast growth, which of course means more jobs. And while a local partner is bound by many parameters of the global brand, there is more than enough room for him to exercise his management and entrepreneurial chops.
But building one’s own brand, with everything relying on you, in competition with giants is a different order of skill and success. And probably makes up for the stress. – Rappler.com
Coco Alcuaz, host of Rappler’s What’s The Big Idea interview show, is a former Bloomberg News bureau chief and ANC business news head. Chat or follow him on twitter @cocoalcuaz