More and more Kazakhs are swapping out tea for coffee. Cafes and roasters are expanding in the cities.
The coffee industry should keep an eye on Kazakhstan. Its GDP is by far the highest in Central Asia, and Kazakhs enjoy annual incomes of $30,000 in purchasing power terms, above the level in China, according to 2019 IMF figures. Part of the Soviet Union until 1991, it is the world’s 9th largest country, with a population of 19 million people. As in Russia, tea is the drink of choice.
But coffee is becoming popular thanks to consumers in cities, especially young people. Many caught the coffee bug while studying overseas in the United States or Europe. Another customer segment is foreigners: business people visiting from the U.S., Japan, and Europe, as well as workers from Turkey. Roasters and coffee shops are expanding. Consumers are trading up from instant to natural coffee. More and more specialty coffees are available.
These and other factors lifted Kazakhstan’s imports of natural coffee by 19% in 2021, to 2,000 tons, according to statistics from KazakhZerno, an agricultural research agency, as reported by Agronews.com.
Premium coffee became more accessible to Kazakhs in the late 2000s when a few coffee shops affiliated with international chains, like Australia’s Gloria Jeans’ Coffee, began to establish stores in the cities. Russia’s Shokoladnitsa opened six coffee houses, four in Almaty, the largest city, and two in Astana, the capital, now known as Nur-Sultan. These names were followed by Traveler’s Coffee in 2011, Costa Coffee in 2012, and Starbucks in 2015.
Growth sped up from 2019–2020: In Almaty, the number of sales points with soft drinks and coffee increased by 120%, and the number of coffee shops by 62%.
The emergence of local roasting shops helped nurture Kazakhstan’s own coffee culture. Today, there are several dozen roasters in Kazakhstan. Among those established by Kazakhs are Serikov Coffee Company, Vanilla Coffee Shop, and Seventy Coffee. Two large roasters of specialty coffee founded by foreigners are JumpingGoat Coffee and Bowler Coffee Roasters.
Among local coffeeshop chains are Daily Cup, Coffee Boom and Madlen. They might lack the brand recognition of global chains, but they are strong competitors, thanks in part to lower prices. Then there are Flask Coffee, Aroma, Nurba’s Espresso, Tea Coffee Garden, Holder, Sensilyo, Petite Chocolate & Coffee and Bostan Coffee.
With competition heating up, local coffee shops increasingly seek to differentiate themselves in the market. For instance, Tchibo Coffee emphasizes sustainability. It recycles its waste paper and plastic and offers a 10% discount to any customer who brings a reusable cup.
Purchasing a roaster is expensive in Kazakhstan, especially since the currency, the tenge, has depreciated sharply in recent years. As a result, most small coffee houses rent their gear. The average small shop employs three people: a roast specialist, an assistant, and packer. A typical roaster processes up to 10kg of coffee beans per hour, enabling a shop to produce up to 3 tons per month.
Some local operators of coffee businesses welcome the emergence of large players because they believe it will help elevate and expand the entire market. Local companies will be prompted to upgrade service, standardize quality, consult foreign experts, and develop new products and venues adapted to Kazakh preferences.
Most Kazakhs drink coffee with milk, just as they tend to take tea that way, and most of that coffee is soluble. But more and more Kazakhs are switching to natural coffee, including premium products. This trend is driven by expansion in the number of coffee shops, rising consumer awareness, a diversification of roasts and origins, the popularity of coffee-based drinks, and growth in take-out sales.
International coffee businesses might enjoy good prospects of selling directly to Kazakh companies going forward because so much product has long been shipped in from suppliers in Russia, where imports of coffee and other goods have been throttled by international sanctions in response to the invasion of Ukraine. The ruble’s rise has also encouraged Kazakh buyers to purchase supplies elsewhere. Coffee prices in Kazakhstan rose by 40% between January and March of 2022 due to repercussions of the war in Ukraine.
In 2021, Kazakhstan imported 2,000 tons of coffee beans, up 19% year-on-year, and the largest volume — 1,200 tons — was brought from Russia, according to KazakhZerno agricultural research. Other sources were Italy (202 tons), Brazil (127 tons), the Netherlands (62 tons), and Germany (55 tons). In value terms as well, Russia led the imports, at US$12 million, up 30%.
As for instant coffee and concentrates, Kazakhstan imported 3,000 tons in 2021, down 17% year-on-year, but up 7% in value terms, reaching US$20 million. Russia was overwhelmingly the main supplier, at 2,700 tons, followed by Germany (80 tons) and India (77 tons).
Kazakhstan’s role as a hub for business and trade in Central Asia has positioned it to re-export coffee products to Uzbekistan, Kyrgyzstan, and Mongolia. If Kazakh companies import more product directly from suppliers beyond Russia, their niche export business could well expand, given the difficulties faced by Russian suppliers to these neighboring markets and the appreciation of the ruble.
Pioneering a Local Coffee Shop Chain
Back in 1997, well before the arrival of international chains, entrepreneur Elena Kharitidi decided to open a coffeeshop in Shymkent, even though purchasing an imported coffee machine cost $2,500, as much as a two-room apartment in that city at the time, according to a profile in Forbes Kazakhstan.
Since she had often visited Greece, where her father was born, she modeled the shop on the common Greek format of a coffee bar with pastries, or kafeneion and patisserie. Later the shop added meals, matching the coffee-plus-meals format that is typical in many post-Soviet countries. By responding to local customer preferences, her business grew and she gradually expanded operations.
Today, in Shymkent, Taraz, Astana and Almaty, the company has 25 points of sale, of which 18 operate in the format of coffee and confectionery. Franchises are expanding the chain.
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