Edward Tirtanatra-Building The Fastest -Growing Coffee Chain in Indonesia
The coffee industry and trends are constantly evolving, and whether you walk past a coffee-house chain on every corner or see the latest caffè latte post on Instagram; it’s safe to say that Indonesia is a very caffeinated country. As one of the top coffee producers with an annual production of 600 thousand tons, which constitutes 6.6 percent of the global coffee production, the potential for the homegrown coffee industry can still be explored further,
Since its introduction by the Dutch colonists, Indonesians have been attached to coffee. Today, drinking coffee has become a tradition and part of the everyday life of Indonesian. In major cities such as Jakarta, Bandung, Surabaya, and Bali, many international and local coffee house chains operate in shopping malls and office buildings, but the genuine coffee culture is observable on the street level.
This month, The Peak interviewed Edward Tirtanata, the CEO and Co-Founder of Kopi Kenangan, the fastest-growing grab-and-go coffee chain in Indonesia, to talk about the idea behind the brand, standing out in a crowded market, and the impact of technology in the F&B industry.
Where did the idea of Kopi Kenangan come from?
I started Kopi Kenangan in September 2017, because there is a lack of mass affordable coffee chain in Indonesia. Only 7 percent of Indonesians drink freshly grounded coffee from a coffee retail chain. Furthermore, based on Euromonitor data, Indonesia’s consumer spending on chained coffee shops still lags behind its neighbors with US$1 per capita as of 2018 (versus Phil’s US$ 3 and Thai’s US$ 6.7).
What is the meaning behind the name ‘Kopi Kenangan’? Why do you name your drinks with unique names that mostly talk about ex-lovers?
Based on my experience making Lewis & Carroll which sounds exclusive and expensive, I realize that the customers are more attracted to brands that they can relate to. Everyone can relate to “kenangan” (memory), especially “kenangan mantan” (memories of ex-lovers).
The grab-and-go coffee concept has been a trend in Indonesia. When you first established Kopi Kenangan, a lot of coffee brands with a similar concept were already being on the market. What is your strategy to seize people’s awareness of your brand?
When I first started, Kopi Kenangan was the first grab and go coffee chain which enters commercial spaces like office and malls, and that is still the case today. The strategy is simple, just provide the highest quality coffee with an affordable price. People will eventually talk and come back with their friends.
What is the key to be stand out in the middle of grab-and-go coffee brands?
We had the first-mover advantage and then we maintain the quality and service, hence we are still the ‘top of mind’ in the kopi susu category in commercial spaces.
What kind of coffee beans do you use in Kopi Kenangan ?
We only use export-grade Indonesian beans and organic palm sugar. We use proprietary coffee blends which consist of Giling Basah coffee from Aceh Takengon; Double soaked coffee from Sidikalang, North Sumatera; Flores Coffee with a hint of sweet cinnamon and cedar woody; Java WIB ‘West Indes Briesling’ which is firstly introduced by the Dutch early settlement.
Kopi Kenangan has a lot of stores, how do you manage the quality to remain the same in every store?
We are combining technology and meticulous SOP. Hiring the right talent also helps. I am hiring talents who have been in the industry for years to help us develop and closely watch our SOP implementation.
What do you think about the rapid growth of local coffee shops today?
I fully support the rapid growth of local coffee shops, I don’t see them as competitors, they are helping us penetrate the market. We want the market to appreciate freshly grounded coffee. Ninety-three percent of Indonesians don’t drink freshly grounded coffee, the market is big enough.
As a local coffee entrepreneur, do you find it hard to compete with the international coffee shop brands? How tight is the competition?
Indonesia has the fourth-largest population in the world, meaning it is a huge market with low penetration. I consider other coffee brands as ‘friends in penetration’. For example, we are collaborating with other reputable coffee brands on certain projects to further enhance Indonesia coffee market.
In 2018, you received US$ 8 million funding from Alpha JWC Ventures, how did that affect your business expansion?
It means everything. Our business is relying heavily on CapEx and our rate of expansion is as fast as the amount of funding we get. That is why we are receiving an additional US$ 20 million from our series A.
Before you created Kopi Kenangan, you were running Lewis & Carroll. Tell us a little about the establishment of Lewis & Caroll.
Lewis & Carroll is a premium tea brand. We have 7 outlets all across Jakarta and an outlet in Riyadh, Saudi Arabia. We are planning to grow our wholesale business in the future. We envision our teas to be in most hotels or restaurants in Indonesia.
From your perspective, how is the tea culture and industry in Indonesia? Is it as popular and big as the coffee culture and industry?
The tea culture in Indonesia is pretty unique from a global standpoint. Just like coffee, we mainly consume the beverage with milk and sugar. In both industries, we are not a nation that consumes tea or coffee directly without milk or sugar and as you can see both industries are growing rapidly.
Between the coffee business and tea business, which one is more difficult to handle?
Coffee is harder to handle at the moment because we are opening at the rate of 15-20 stores per months. At that scale, maintaining consistency and ensuring on-time openings are hard.
What do you think about the rapid development of technology nowadays, such as financial technology, online food service, et cetera? How significant do those technologies affect your businesses?
Technology changes the whole business landscape in Indonesia. In Kopi Kenangan, 95 percent of our transactions used to be done in cash, now over 50 percent of our customers use eMoney. And then the online food delivery ecosystem here is the most dominant compared to other SEA countries.
What is the most important thing in managing F&B business, especially tea and coffee brands?
Consistency and quality of service. We are running 80 stores and I can’t visit each outlet every day anymore like when I just started Lewis & Carroll. Therefore, it is very important to make the right SOP and have the right talent to ensure the right SOP implementation.
What are your messages for the young generation who interested in F&B business?
Be different. If you want to create and capture lasting value, don’t build an undifferentiated commodity business.