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How homegrown Bo's Coffee competes with Starbucks

The strategy of delivering a distinctly Filipino coffee experience works wonders for this Cebu-based coffee chain led by Steve Benitez.
By Maricris Carlos |

 

THE CHALLENGER. “I initially felt threatened because a big brand like them could always, maybe without even trying hard, beat independent stores,” said Bo's Coffee founder Steve Benitez of Starbucks coming to the Philippines. Photo by Jason Quibilan / Entrepreneur Philippines  

 

Steve Benitez felt threatened when he heard Starbucks was setting up shop in the Philippines.

 

Sure, Bo’s Coffee had a bit of a head start against the Seattle-based global chain when it opened here in 1997: Bo’s was already in Cebu when Starbucks set up shop in Metro Manila.

 

But he also knew that Bo’s Coffee would eventually cross paths with the American chain, which at the time already had 1,412 stores worldwide—just a fraction of its 23,768 stores worldwide as of March 2016. Brought in to the Philippines by the Rustan’s group, it is now the biggest coffee chain in the country, with more than 200 stores and plans to add 100 more through 2017.

 

So imagine the pluck needed to pit Bo’s Coffee, which now has over 70 stores nationwide, against the coffee chain.

 

 

FROM SOIL TO CUP. Bo’s Coffee banks on "roaster to cup freshness," using freshly-ground coffee grown on Philippine soil. Photo from Bo's Coffee website 

 

Taking on a global giant

“I initially felt threatened because a big brand like them could always, maybe without even trying hard, beat independent stores,” said Benitez. “We didn’t know what to expect. We didn’t know what the impact to our business was going to be. What I knew was that I had to be prepared.”

 

Benitez, who is the president and CEO, did not let fear get the better of him. Instead, he decided to take Starbucks’ local presence as a challenge to improve the offerings and service at Bo’s Coffee. “Okay, they could do it, but we could do it, too,” he said. He reinvented the store, leveled up the products, built up the brand, and benchmarked standards to deliver a Filipino coffee experience that puts a spotlight on Philippine coffee.

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HOMEGROWN. Bo's Coffee uses handpicked coffee beans that come from the Philippine highlands. Photo from Bo's Coffee website

 

A distinctly Filipino coffee experience

Instead of marketing the brand as if it were foreign, as other businesses had done, Benitez decided to highlight Bo’s Coffee as a Filipino brand. “We really emphasize that Bo’s Coffee is a homegrown brand, showcasing Philippine coffee, with global standards,” he said. The intention, he said, is to differentiate Bo’s Coffee from other chains and to find a new market that “is open and willing to patronize homegrown products from homegrown brands.”

 

The local chain’s move is on point, said marketing guru Josiah Go. “Strategy is about choice. To stand out in the marketplace, a brand must deliberately choose where they can create and capture value. One option to fight foreign giants is to be different by being local. This is clever—foreign competition can’t defend against this positioning.”

 

Bo’s Coffee is further enhancing this positioning through a rebranding started four years ago. “I just enhanced the concept more, and then I just really focused on the basics. I focused on really delivering that Filipino coffee experience.”

 

 

SEALED FRESH. The handpicked coffee beans from the Philippine highlands are then packed and transported to Bo's Coffee branches all over the country. Photo from Bo's Coffee website

 

Homegrown goodness

Now, the chain is in the process of giving its stores a stronger Filipino look, using more homegrown coffee beans, and even opening its doors to Filipino-made goods looking for a distribution platform.

 

Benitez now wants to ramp up expansion. He even set up a permanent base in Manila in 2014 so that he could oversee the expansion himself. “In the last two years or so, we have been working on the systems and the organization. We’re ready to do more. We have a good team who share my vision—we want 100 stores by 2017,” he said.

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Bo’s Coffee is ready to throw its hat in the global arena too, Benitez said. No, he is not afraid of the prospects of fiercer competition that will be brought about by the ASEAN (Association of Southeast Asian Nations) economic integration, which started end-2015. “We’re the homegrown brand. We know the market,” he said.

 

***** 

Maricris is the former managing editor of Entrepreneur Philippines magazine. 

 

This article was originally published in the June 2014 issue of Entrepreneur Philippines magazine. Minor edits have been done by the Entrepreneur.com.ph editors. 

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