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With foreign coffeehouses absent, Lithuanian takeout coffee chains muscle up

Sep 07, 2011
By Linas Jegelevicius

With foreign coffeehouses absent, Lithuanian takeout coffee chains muscle up
TASTES GOOD TOO: Vytautas Kratulis says that fancy advertising is distorting the marketplace for just good, delicious coffee.

KLAIPEDA - When most coffee lovers in the developed world roast and grind coffee beans in search of a uniquely amazing aroma, Lithuanians largely still tend to brew their coffee, simply pouring hot water on already ground coffee beans. Does this sound too obsolete to you? Western coffee sipping traditions, however, are encroaching  on the country steadfastly.

“When it comes to coffee-drinking culture, that characteristic - brewing coffee instead of roasting and grinding coffee beans - distinguishes us from Westerners. In most cases, a Lithuanian needs just a kettle, an inexpensive coffee blend and a cup. Therefore, generally, one will find a considerably larger supply of raw coffee beans in a Western country than in Lithuania. Also, what is attributive to Lithuanians is that, though compatriots like to drink coffee every day, most know very little about it,” Violeta Masteikiene, head of Good Idea Magic Projects, that organizes the annual Coffee Culture Days, said to The Baltic Times.

Masteikiene observes that Lithuanians prefer different coffee blends; however, Jacobs and Lavazza blends prevail, as well as Macchiato, Cappuccino and Latte coffees.
She emphasizes that consumers are becoming savvier, finding out new coffee types and blends, choosing coffee beans for different roasting and grinding procedures and savoring the unique aroma.

Vytautas Kratulis, another organizer of the Coffee Culture Days and owner of takeout cafe chain Sviezia Kava, notes that, in times of marketing power, coffee aroma “is being created in a flashy advertisement rather than in a coffee packet.”
“Regardless of a yucky coffee taste, people, seeing an advert for the coffee, give in to the flashy crap, believing they are buying coffee from the best coffee plantations in the world. After they buy and try it, one usually agrees that it tastes ‘not so good,’ but finds the explanation: ‘All kinds of coffee taste bad…’” he says.

With the Latvian cafe chain Double Coffee off the coffee map, it seems that no foreign takeout cafe chain or franchise is to come to Lithuania any time soon. In truth, there have been several attempts from such famous coffeehouses like Starbucks and Australian Gloria Jean’s Coffees. However, neither has made the last pitch in stepping into a rather unpredictable Lithuanian market.

The bankruptcy of Double Coffee, undoubtedly, cautions foreign coffeehouses. In a court hearing leading to the filing for bankruptcy, the coffeehouse administrator, DC Holding, admitted to having invested over 6 million dollars in the business in Lithuania and asked the court to carry out its restructuring. The bankruptcy of the takeout coffee chain was preceded by the same demise in Estonia earlier.
Evalda Siskauskiene, president of Lithuania’s Hotel and Restaurant Association, says that the Latvian company “has dug the pit itself.”

“Their cafes, obviously, had too high prices. When hit by the recession many cafes reviewed their prices and switched to more economy-class menus, offering cheaper coffee as well as macaroni, pizzas and pancakes. Double Coffee did nothing in meeting the economic reality. Their price and food quality was an example of a classic mismatch. Besides, their coffee was too expensive for most, Siskauskiene maintained.
Kratulis points to other reasons leading to the bankruptcy of Double Coffee: “There was more marketing than coffee in their business.”

“It is hard to have a prosperous takeout coffee business, selling a bad quality coffee and charging a lot for it. That was the case of Double Coffee,” Kratulis emphasized to The Baltic Times.
He is sceptical about the arrival of Starbucks and other well-known takeout coffee chains to Lithuania. “It seems the international companies have not determined yet on coming to the Lithuanian market. The put-off is likely due to the gloomy economic forecasts, predicting little economic growth. In addition, a narrow coffee market and limited purchasing power of the locals must have been considered,” says the coffee business owner.
Laima Vezeliene, director of Ex Prompto, that runs the Vero Cafe chain, says that the Latvian company “had no clear business strategy.”

“I think the main reason of their demise was their inability to cater to a certain segment of the market. Though their sign said they served coffee, the cafes offered extensive, rather expensive dish menus as if downplaying coffee. The company, seeking to take on different activities, has failed to establish its name as a coffee walk-in,” Vezeliene pointed out.
With no powerful foreign players in the market left, Lithuanian-owned coffee-serving companies are trying to take it on. Sviezia Kava, Coffee-Inn, Skiro and Vero Cafe are considered to be the stand-outs of the take-away coffee market.

Kratulis, owner of Sviezia Kava, admits he started his own coffee business when he realized that his prepared coffee is much tastier than any he had before. “Eleven year ago, I first opened a coffee bean roasting and grinding store. The smell of roasting coffee beans lured all passers-by to look for the source of the marvelous aroma. When people find us in one-room premises in an office-building, they would be surprised to see that we roast, grind and brew coffee on the spot, instead of traditionally brewing coffee. With the success, I went on opening take-out coffee cafes, where we, sure, served only fresh coffee. Allowing coffee lovers to watch the coffee-making process and enjoy the unique aroma have been a part of the business success,” the businessman asserted.

Over 11 years, the business has come a long way – from one-room premises in an office-building to a chain of 6 cafes.
Kratulis says Lithuanians always drank a lot of coffee. “However, unfortunately, in Lithuania, its consumption and selection often lack consciousness, as most people tend to pay more for the label and the marketing than for quality. Therefore, specialized coffee shops in the country are still not popular as they are elsewhere,” the Sviezia Kava owner pointed out.
The company has chosen to use “fresh” three times in its motto: freshly harvested, freshly roasted and freshly ground.

Sviezia Kava brings coffee from as far away as Colombia, Costa Rica, Bolivia and Honduras. “Nevertheless, it’s not the country as much as the particular coffee farm owner, who grows the harvest, that is important,” the businessman stressed. He says, however, with the volumes of coffee sales and coffee beans roasting and grinding increasing, coffee e-sales have not been successful. “Likely Lithuanians are not up to that yet. In addition, the e-business has been limited by our retail stores only in Vilnius,” the businessman explained.

He says that he does not eye expansion at present. “It is very complicated currently because of many things,” he said, not elaborating.
Kratulis regrets that low-quality coffee servers prevail in the market. “Even in a good restaurant, no one can be sure a cup of served coffee will be of good quality, as most restaurants and cafes prefer those suppliers which give away coffee-making apparatuses,” he said.

Involved in the social event Coffee Culture Days, and letting his coffee speak for itself, the Sviezia Kava owner aims to make a change in the coffee consumption culture. “We are not satisfied with what is now in the coffee market. Our goal is to produce significantly better quality coffee. Much better coffee may be brewed. That which is acceptable to one coffee lover, is not necessarily liked by another, and that which is sensed by one, not necessarily by another. We believe that Lithuania is no longer a remote province. In Lithuania, people learn to appreciate and value good quality, delicious coffee,” Kratulis said.
One of the biggest takeout coffee chains in Lithuania, Vero Cafe, is expanding with recent openings in Klaipeda and Siauliai. “In Klaipeda, as in Vilnius and Kaunas, takeout coffee traditions are only shaping up, however, we see a growing demand for the service. In Vilnius, the demand for the service is dictated by the faster lifestyle, while in Klaipeda, larger tourist flows influence the development,” Vezeliene said.

She says that Lithuanians are assuredly adopting Western coffee-drinking traditions - sipping coffee not only at their office desks or at home, but also while taking a stroll in a mall, or simply on the street. “The coffee-serving market is still far from being glutted. With the Latvian Double Coffee off the map, many local coffee brewers rev up their efforts in attempts to get into the market,” Vezeliene maintained.

She says that knowledgeable coffee servers are of utmost importance in the business. “Our coffee barristers are the best in the industry, constantly reaping awards in the Lithuanian coffee-making championship. We do emphasize their ability to knowingly and reasonably explain to our customers about the kinds and blends of coffee we offer in our cafes,” the Ex Prompto director stressed.

The chain runs 4 cafes in Kaunas, 5 in Vilnius and now 1 in Klaipeda and Siauliai. In addition, the company started doing something that no one has ever tried before – offering a mobile Vero Cafe, a coffee-cup-shaped four-wheel car on-call. And yes, it is plastered with the company’s garish attributes all over!
“Who can miss such a car when it is out there on Lithuanian roads?” wonders the director, coming up with a quick answer, smiling: “None!”

“From now on, those who want to have delicious coffee served at their events and gatherings will be able to do so just giving us a call, and the car-turned-coffee-apparatus will show up at any corner of the country. We have received many orders by now,” asserts the businesswoman.
Asked whether she is not concerned about the arrival of a mega-foreign coffeehouse, she just laughed, “Oh, no. Let them all come at once!”

“As long they [foreign coffeehouses] will be preoccupied with profit-making at any cost, we will be Ok, as we are offering the best quality and price ratio in the industry, meticulously focusing on the slightest details of the coffee-making process. We, for example, have schedules for the changing of water filters in the coffee machines.  It is something nobody in the industry does. The scedules are seen by everyone and the procedures are strictly followed,” Vezeliene pointed out.

She contemplates about expansion abroad, but did not elaborate, saying that Latvia might be “one of the options.” There, however, some serious Lithuanian-owned rivals might be waiting in the fledging takeout coffee market.
The Coffee Inn chain already involves 8 takeout coffee cafes and is looking for expansion in smaller towns in Lithuania as well as in Latvia. “Our cafes aim to be town-rhythm pulsing gatherings of local communities. In order to well integrate into the local life, it is necessary to know it well and live by it, therefore, only local people administer our cafes,” Nidas Kiuberis, one of Coffee Inn’s owners, said. The takeout coffee chain has recently opened its third cafe in central Riga, at the crossroad of Terbatas and Dzirnavu streets.

Kiuberis says that the takeout cafe culture has been only shaping up in the Latvian capital, lagging behind Lithuania in many facets. However, the cafes in Latvia, he claims, have been a success, suggesting takeout Espresso, Cappuccino, Caramel Machiato and other coffees.

“We are not afraid of experimenting. All our coffee recipes, with the exception of the traditional kinds, have been started from nil. Continuing experimenting and trying out new things is a key thing in our business strategy,” the Coffee Inn co-owner said.
The market encroachment of the Lithuanian takeout coffee chains would be, undoubtedly, challenged by foreign mega-coffeehouses. With their absence, the national chains, luring clients, seem to be on a lengthy road of experiments. Just let them lead to a cup of more delicious coffee and better service!

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