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Traveler’s Coffee founder positive about future despite economic downturn

By Olga Gertcyk
09 January 2015

Insatiable demand sees turnover increase, profits continue and new branches open as American owner says brand is 'living on its own'.

'Today 50 per cent of our profits in Novosibirsk are generated by beverages, can you imagine that?' Picture: Vera Salnitskaya

Siberia’s best-known foreign entrepreneur has insisted he has no fears about the deepening economic crisis with plans to further expand his chain of coffee shops.

Christopher Tara-Browne has been blazing a trail across Russia with almost 100 Traveler’s Coffee outlets since he first began in humble beginnings in corner of a pizzeria in 1998. And while there are growing concerns about the impact of Western sanctions and the unstable rouble, the US-born businessman feels nothing but positivity about the future.

With an insatiable demand for his coffee, over the past 12 months turnover has increased and the business continues to be profitable, with the first new branches opened in China. 'It’s been a very interesting year for us – one of the best in terms of growth', said the 46-year-old American. 

'Now we have 94 coffee shops, that’s 24 more than last December. Despite all the difficulties, there is a feeling that the brand is living on its own - we constantly have partners contacting us to buy a franchise. 

'Good coffee is no ordinary product, it's affordable luxury. If you love coffee, you will still be buying it. It’s like chocolate; a human wants to feel like a human and it’s very difficult to give up good stuff once you get used to it'. 

Traveller’s Coffee tycoon positive about future despite economic downturn


Travelers Coffee founder positive about future despite economic downturn
'Now we have 94 coffee shops, that’s 24 more than last December'. Pictures: Travelers Coffee


The origins of Traveler’s Coffee are nothing if not humble. When Tara-Browne left San Francisco for Russia 20 years ago it was a drink of a 'truly disgusting' cappuccino in an Irish bar in Novosibirsk that gave him the idea to branch out into coffee for himself. Starting with a small counter in the corner of a pizzeria in the city in 1998, the former music producer has managed to build up a veritable empire of coffee shops.

Almost 100 are spread out across Russia, as far west as St Petersburg and as far east as Vladivostok, with branches in Kazakhstan, Azerbaijan and now China.

Over the past two decades he has spearheaded a coffee revolution in Russia, taking on the likes of major US firm Starbucks, and winning.

The average turnover of his cafes in Russia rose by 6.5 per cent in 2014, and more outlets have appeared, with two operating in China. The only Traveler’s Coffee to close down was in May in Donetsk, following the outbreak of tensions in the region. Even the emergence of a new micro-coffee bar culture in Novosibirsk in recent years has failed to hold his business back.

He said: 'We don’t really feel that. There might be some people who leave, but the customers come back again later. We do also want to do expresso-bars but only in shopping malls and office buildings rather than kiosks. We won’t be doing street spots where customers have nowhere to come in - it's meaningless in Siberia because they're not working for three or four months a year.

'We could set up pavilions but we won’t because it's risky in Russia, for if a new mayor comes and bans them and I would be blushing in front of my investors. There is already too much unpredictability in Russia, so why take more risks?'

Traveler’s Coffee founder positive about future despite economic downturn
'Novosibirsk is a coffee city now, and you can’t do anything to change that'. Picture: Vera Salnitskaya


Tara-Browne admitted the recent economic problems have pushed production costs up by about five per cent, and the costs of opening up a new café have increased by 30 per cent. And with much of what he needs – including the coffee itself, as well as syrups, textiles and lamps – only able to be bought overseas, it is likely costs will increase further.

But business is booming and, in any case, the tycoon believes the crisis may even benefit Traveller’s Coffee, by helping to boost Russian firms at the behest of overseas companies. 'The crisis is actually a good thing', he said. 'It clears out the market. There are only three big coffee companies in Russia apart from us: Shokoladnitsa, Starbucks and Coffeeshop. If the situation gets really tough, only Shokoladnitsa will survive. They are the biggest, they have a corporative approach and they have money.

'As for Starbucks, these guys are not from Russia at all. If the financial characteristics are bad, they can move anywhere and they’d be better opening more cafes in Dubai or Turkey. We say: the production’s here, the company’s here, the experience is here.

'Our internal needs don’t change regardless of what’s happening in the world'.

Traveler’s Coffee founder positive about future despite economic downturn


Traveler’s Coffee founder positive about future despite economic downturn

The average turnover of Travelers Coffee in Russia rose by 6.5 per cent in 2014. Pictures: Vera Salnitskaya


Tara-Browne has experience in this already having survived two previous economic downturns, including the 1998 crisis just four years after arriving in Russia.

He said: 'The hardest crisis for me was the one in 1998. There was nothing to do, just to endure it. I remember that after the two years of crises when it felt that nothing good would happen, life started to change. That's how I'm feeling now. We'll get through it and will keep working'. 

As far as the rouble problems are concerned, Tara-Browne sees no reason to be pessimistic quite yet, having been in Russia the last time prices rocketed overnight.

He said: 'I came to Russia in 1994 and that’s when it was truly sad. You could regularly see how the prices were changing every day. People thought that they had to buy something immediately because it wasn't clear what would happen the next day, how much would their money buy. But our situation now is not the situation in 1991. We’ve learnt a lot, and people got used to living in different conditions.

'I remember when we had our first coffee bar in Lenina Street, and people came in and were surprised how expensive a cappuccino was. We had to spend a few years to convince clients that this coffee is worth this price.

'Now you don’t need to convince anyone - today 50 per cent of our profits in Novosibirsk are generated by beverages, can you imagine that?

'That's it, Novosibirsk is a coffee city now, and you can’t do anything to change that'.

Comments (1)

I am from Spain, from the region where Inditex (Zara) has its headquarters (Galicia, NW Spain), and according to Zara, Russia is one of the most important markets for expansion, and one of the most profitable ones.
Enrique, Spain
19/01/2015 08:01
1
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