The most famous person in Colombia (with the permission of the patriarch of Macondo, José Arcadio Buendía) is going to be seen a lot in Spain. Juan Valdez, the peasant with the Aguadeño hat, large mustache and always accompanied by his mule (Conchita), created in the late fifties of the last century by the American advertising agency Doyle Bernbach, is one of the greatest ambassadors of his country in the world. As it is the brand with which he was baptized to make Colombian coffee known outside its borders after a crisis with which the country’s coffee growers rushed to justify the higher price of their beans because of their better quality.
Time has passed a lot. And it is now that Juan Valdez wants to give a big boost to his expansion in Spain. In the next five years he plans to open 100 stores. An ambitious goal that doubles the one announced by the company owned by the National Federation of Colombian Coffee Growers (Procafecol) when it opened its first store in Madrid, in 2006, and was left in the lurch, parked with the three establishments it has today in two shopping centers in the capital. “We focus a lot on Latin America and the result is that we are in all countries except Venezuela and Uruguay. And we set foot in Spain, we opened some stores that are profitable [facturan un millón de euros al año] and that now we are going to expand because we need to make the business scalable”, explains the international vice president of Juan Valdez Café, Sebastián Mejía, by videoconference.
The brand has 350 establishments in Colombia, which earn close to 100 million dollars (about 94.4 million euros), and 140 in its international network that operates in 17 countries (of the 40 in which it is present) and moves 50 millions of dollars.
On this occasion, Procafecol has sought a partner in Spain to lead its great growth spurt. This is Raúl Armengol, founder of the La Hermosita bakery and pastry chain, with 11 stores in Madrid. Both companies have created a joint venture in which Armengol has a 75% stake and Procafecol 25%: Cafescol Tiendas, which will be responsible for the sale of Colombian coffee in national territory both in supermarkets and in bars and restaurants (horeca segment ) or through the Juan Valdez stores (where the highest turnover in Colombia comes from, but not internationally). “We import the product from Colombia and here we distribute it in supermarkets, retailershorecas and stores so that the brand is visible in as many points of sale as possible”, indicates the founder of La Hermosita (formerly Juliettas) and general director of Juan Valdez Café in Spain.
The international development of Juan Valdez focuses on the franchise system. Only in Chile, Ecuador and Spain does he do it through joint venture. In 2022 the company, owned by 540,000 Colombian coffee-growing families, will promote the expansion of its network of establishments (without forgetting the other sales channels). It will have 190 abroad and from 500 to almost 600 in total, according to Mejía.
He knows in depth all the sides of the coin.
Spain, where the size of the coffee market is estimated at more than 1,900 million dollars (1,794 million euros), number 12 in the world, is a strategic point. A very attractive country, the gateway to Europe, and which receives a large number of foreign tourists, appreciates the vice president of Juan Valdez. As of September, the company will open the first establishments, although it will be in 2023 when the openings reach their cruising speed, estimated at more than 20 per year. Despite the fact that most will be franchised, Cafescol hopes to open its own center before starting to franchise and next year it will open one of its own establishments per quarter, according to the company’s managers, who put their investment at 1.5 million euros in the next five years.
The brand will offer three store formats to its Spanish franchisees: kiosk, bar and terrace, they are called, and will require an investment of between 90,000 and 150,000 euros by the franchisee, explains Raúl Armengol, who speaks of a horizon of between 2.2 and 2.5 years to recover it and the annual return they can report is estimated at 20%. The objective of the expansion goes through Madrid, Barcelona, Valencia and communities such as Andalusia, Galicia, the Canary Islands and the Balearic Islands.
The development of Juan Valdez will run parallel to that of La Hermosita, which expects to reach a turnover of eight million euros (in 2021 it entered 3.3 million) this year with two of the three companies managed by Raúl Armengol: PV Gourmet, a center of production of 1,500 square meters in Arganda del Rey (Madrid), a pastry manufacturer that supplies its own stores and third parties. And the company that manages the La Hermosita establishments, which aims to reach 20 operating units by the end of 2022 and from there make the leap from Madrid to the rest of Spain. “We are going to grow with both brands. They are totally complementary. In fact, La Hermosita is going to be in T4 at Barajas airport and Juan Valdez has a tender very close to being signed. It is better that the space be ours than that of the competition”, says Armengol.
the covid disaster
Despite the fact that the pandemic took its toll in 2020 on the establishments of both brands due to the closures (which in the case of the Colombian brand “were a disaster” that was used to close and relocate stores, and that was offset by the increase in sales in supermarkets and the acceleration of the channel e-commerce, explains Mejía), allowed them to prepare for a faster takeoff. Juan Valdez focuses his international expansion, in addition to Spain, in Turkey (where he entered this year with a store and has four under construction), Qatar (he is going to inaugurate the second) and the United States (he is present in Florida, but has put the spotlight in other states). In addition, he studies his arrival in the United Arab Emirates and his return to Mexico.
Juan Valdez, who competes with Starbucks, Dunkin’, McCafe and Tim Hortons around the world, doesn’t think of himself as an expensive banner. “We are always below or equal to Starbucks in the world,” says Mejía, who confirms the good times that the coffee growers are experiencing because coffee prices are rising tremendously on international stock markets, although he acknowledges that the increase in costs (especially in the logistics area, which is what worries them the most due to traffic jams in ports, the lack of containers and delays of around a month in the delivery of the product in some countries) has led to the company to increase the prices to the end customer by 10% and also to increase its safety stock at destination so that sales are not slowed down. Although the coffee harvest in the world’s third-largest producing country is down, as is the case in Brazil and Vietnam (the first two), the 13 or 14 million Colombian bags “guarantee that there are no product availability problems,” says Mejía. .