Ethiopia: Smell the roasted coffee! - African Business Magazine
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Ethiopia: Smell the roasted coffee!

Ethiopia: Smell the roasted coffee!

Raw coffee has traditionally been Ethiopia’s main export commodity but, as James Jeffrey, finds out, modern Ethiopians have acquired what seems an insatiable taste for roasted coffee. Business is booming for the country’s own unique baristas.

Since 1953, the small Tomoca coffee-roasting company just off Churchill Avenue has lured passers-by inside with the smell of freshly roasted coffee drifting from its chimney.

The décor of this family-run business in Addis Ababa recalls a distant era – Emperor Haile Selassie inaugurated Tomoca at the dawn of commercially roasted coffee in the country, produced to add value to Ethiopia’s most prized commodity.

But a smudge of red on a giant plywood map depicting Ethiopia’s coffee regions indicates the swift painting over of an image of Selassie’s imperial crown after the 1974 military coup put a hold on private sector growth.

Staying in business thereafter became the priority until the 1991 revolution released the military dictatorship’s economic straitjacket, and the resultant influx of machinery relaunched the roasting industry.

Since then, Tomoca’s business has grown. It has been opening cafes and building a coffee roasting factory outside Addis. The current political-economic climate is facilitating further expansion, as it is for other local coffee businesses. Coffee has long played a central role in Ethiopia’s macroeconomic fortunes as the country’s largest export earner: in 2012 coffee exports generated more than $800m, a figure expected to exceed $1bn by 2015.

You need a partner to get onto foreign store shelves as distribution is a specialised business; these brands might have history but they are still competing in a global space

Perhaps of greatest influence in the domestic market is that at present, only 1-5%, if that, of Ethiopians buy roasted coffee in Addis Ababa. Outside the capital the figure is even lower, providing a significant market opportunity as a population of 92m modernises.

“Now is the right time to cash in on our history,” says 28-year-old Wondwossen Meshesha, Tomoca’s operations manager. “Because we have been here so long all we have ever done is invest in the brand.”

Tomoca’s business is growing by up to 70% annually as Ethiopia’s coffee-drinking customs change, and foreigners discover its coffee. Roasted coffee represents 80% of business. Domestic sales through Tomoca’s five cafes and selected supermarkets account for 75% of roasted coffee turnover. The other 25% of sales occur overseas – coffee is available by mail order through its website – to which Tomoca hopes to add new markets.

“Ethiopian coffees have two major advantages over all other coffees in the world,” said Geoff Watts, vice president of coffee at Intelligentsia Coffee, a Chicago-based roasting company. “Incredible genetic diversity and near-perfect growing conditions.”

Taking notice

As the birthplace of Arabica coffee, Ethiopia has 5,000 identified Arabica genotypes while countries such as Brazil and Columbia have about 20 each; yet it was South American countries that became synonymous with coffee production.

Now Ethiopia is recovering lost ground as its international coffee standing and coffee exports – particularly roasted coffee exports, which provide double the revenue of raw coffee beans – grow.

Tomoca hopes to expand regionally into Djibouti, Kenya and Sudan, before going beyond Africa. It already has a Japan-based partner distributing to restaurants, department stores and cafes there, and is working toward similar partnerships in Europe and North America.

Wondwossen explains that funding to enable this expansion will come from increasing roasted coffee exports—with their increased returns – alongside Tomoca’s internal reinvestment plan, which has already spent about $6m to expand its roasting factory to try and catch up with demand.

Ethiopian coffees have two major advantages over all other coffees in the world: incredible genetic diversity and near-perfect growing conditions

Although local commercial banks view manufacturing-based loans favourably, this is still not enough, Wondwossen acknowledges: “We need to find partnerships as we cannot do this on our own.”

Alem Bunna, another of Addis Ababa’s popular roasting companies, likewise wants such partnerships to access new African markets, followed by Europe and Asia, says its marketing manager Getachew Woldetsadick.

Adam Overton, a Los Angeles-based entrepreneur who owns a coffee farm in south-western Ethiopia, is more than familiar with the trials of getting coffee sold internationally.

“You need a partner to get onto foreign store shelves as distribution is a specialised business,” Overton says.

“These brands might have history but they are still competing in a global space.”

Tomoca acknowledges that the company’s ambitions will take time, and Meshesha Wondwossen speaks of a 10-year strategy. But in the meantime the domestic market offers opportunities available sooner rather than later.

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Written by James Jeffrey

After completing a master’s degree in journalism at the University of Texas at Austin in May 2012, James Jeffrey spent a year freelancing in US focusing primarily on business, including writing for the Austin, Houston, San Antonio and Dallas Business Journals. In October 2013 he moved to Addis Ababa, Ethiopia, to write about business-related features primarily, while endeavouring to cover other topics of interest in a remarkable country.

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