Tchibo takes on Starbucks in Germany | Business| Economy and finance news from a German perspective | DW | 29.04.2011
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Tchibo takes on Starbucks in Germany

Tchibo had a network of coffee shops in Germany long before Starbucks existed but let the US company dominate the coffeehouse business in its home market. Now the traditional German coffee roaster aims to fight back.

Cup of Tchibo coffee

Tchibo seeks a larger chunk of the coffee shop business

For years, German consumers enjoyed stopping by their local Tchibo coffee store to grab a freshly brewed coffee served in a white ceramic cup with brown and orange trim.

But more than a decade ago, the roasted coffee products were gradually squeezed aside to make room for weekly changing lines of merchandise from kitchen utensils to clothing, under a new strategy to offset stagnating coffee sales

Meanwhile, Starbucks shops began - and continue - to sprout up everywhere in Germany.

Now Tchibo has decided to "return to its roots," as the company's CEO Thomas Holzgreve said earlier this week, and give coffee a greater priority. And that includes challenging Starbucks and its rivals for a larger chunk of the coffee-shop business.

Three core businesses

Over the next three years, Tchibo plans to modernize its network of 820 stores across Germany to support its three core businesses: roasted coffee products, coffee beverages with snacks and weekly changing non-food merchandise.

The new modern design features wooden surfaces with greater space devoted to areas where customers can sit, drink coffee and enjoy a snack, according to Tchibo spokesman Andreas Engelmann.

"We offer a wide range of coffee beverages, from espresso to latte macchiato, and will brew a fresh cup of a particular roasted coffee that a customer is interested in purchasing," he told Deutsche Welle.

Tchibo store front

In past years, non-food products have dominated Tchibo shop displays

Although Tchibo made space for its non-food products, it never completely phased out its coffeehouse business, according to Engelmann. Some shops continued to offer coffee and more have reintroduced the service over the past few years. Around 500 outlets serve some coffee beverages today.

The new strategy, however, calls for giving all stores a fresh new look with a greater focus on roasted coffee products and a full range of coffee beverages, which customers can consume in the store or take away. Around 100 million euros are earmarked for modernization program.

"Coffee is our core business - we have a long tradition of coffee roasting," Engelmann said.

Long coffee roasting tradition

The Hamburg merchants Max Herz and Carl Tchiling launched Tchibo as a mail-order roasted coffee business in 1949 and opened their first store in the same city in 1953. The company later opened "depots" or small shop-within-a shop operations in bakeries and supermarkets. Today, it has around 8,400 depots in supermarkets alone.

Whether Tchibo will be able to win back the coffee-shop business it once dominated remains to be seen. It faces fierce competition not only from big chains like Starbucks but also McDonalds, with its McCafe lounges.

Author: John Blau
Editor: Cyrus Farivar

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