Posts by Matt Gerber - Athens

Mikel Coffee proves good brew can percolate in budget-conscious Greece

Mikel Coffee Co.

In Greece, going out for a coffee is a favorite leisure activity, as we’ve previously noted. But the financial crisis has slashed disposable income. Some major coffee chains like Starbucks and Costa Coffee have closed branches and, in some cases, left the market altogether. Homegrown brand Mikel Coffee Co., however, has been doing well since it launched in 2008 at the start of the crisis.

Mikel coffee shops are sprouting up like mushrooms, overtaking established local and international players, and soon there will be more than 100 branches in Greece. In 2013, Mikel reported a gross profit of €991,237. The secret to Mikel’s success is catering to a multitude of consumer needs. The prices are competitive, but not low enough to affect quality and brand perception (indeed, Starbucks has been forced to adjust its prices to be able to compete). Consumers also appreciate the generous freebies (small cakes, savory snacks, etc.) that come with the coffee. The stores are open longer than many competitors, with most operating from 5 a.m. till 11 p.m. or midnight. Mikel also offers home delivery, which is proving very popular, particularly for businesses.

The shops answer Greeks’ need to enjoy coffee out of home and socialize like they used to pre-crisis, and let them do so in an affordable way while still catering to the quality expectations Greeks have for their cafés. The chain has become very popular among youth, and the fact that it’s a Greek success story further helps drive brand preference. The moral of the story: When catering to the right needs with the right ingredients, you can succeed even in a crisis environment.

Photo Credit: Mikel Coffee Co.

International coffee makers thrive in Greek crisis

Coffee machines

Greeks love their coffee. In fact, they are one of the highest coffee-consuming nations in the world, with an average per capita consumption of 5.5 kilograms vs. a global average of 1.3. Before the crisis, most people’s daily fix was provided by coffee shops—many of them corporate chains like Starbucks and Flocafé—which charged premium prices. With the advent of the crisis, however, the often twice or more daily fix became a pricy habit—leaving many Greeks priced out.

Coffee producers Nestlé and Kraft capitalized on this by promoting homemade coffee machines that work with capsules. These sleek and modern machines sit comfortably on a countertop and allow consumers to easily create a variety of high-quality, barista-style coffees at home for a fraction of the cost charged by the shops. Often, the machines are sold with a hefty promotional rebate to help consumers get started since the companies make money by selling the coffee capsules. In Greece, this model was originally pioneered by Nespresso, who sells capsules from dedicated boutiques or via online delivery.

Nespresso’s huge success was emulated by Kraft with its Tassimo machines. Such is the demand that Nestlé even introduced a less premium-positioned range called Dolce Gusto to compete with Tassimo—both the latter brands sell capsules directly from the supermarket. In an economy where almost all categories have seen single- or double-digit declines, the capsule coffee market and its machines have increased by 45 percent over the last two years alone. These brands recognized the importance of coffee to the average Greek citizen, and provided a more cost-effective solution for them to fulfill their needs.

Photo Credits: Nespresso, Kraft, Nestlé

The Nanou Donut effect: Greeks are finding new business models

Nanou

With the protracted-crisis environment becoming the new normal, Greeks are adapting in creative ways. One big change is a host of new business models, from farmers selling direct to consumers to retailers selling clothes by the kilo. A great example is the success of Nanou Donuts.

Nanou Donuts was focused on wholesale until its founder, John Nanou, decided to do something about the many requests to help unemployed people get a job selling doughnuts. His business model: Provide doughnuts at ultra-low prices to small outlet stores manned by previously unemployed people. The catch: The shops—usually in previously shuttered empty properties—are open only from 7 p.m. to 9:30 p.m., when the fresh doughnuts are produced. Nanou then provides these to the outlets with an extremely low margin, enabling them to sell high-quality doughnuts for as little as 60 cents. They have become the craze, with queues often forming outside the small shops and sales records being broken, with many of the shops selling more than a thousand doughnuts during their brief opening hours.

Photo Credit: Nanou Donuts House