Shell South Africa is perhaps the most recognised fuel brand in the country, if not the world. But positioning the brand as the frontrunner in the industry doesn’t come easily. The company is working hard to improve and increase its customer offerings and that has been demonstrated in the past few years by a thriving relationship with Vida e Caffé.
Back in 2013 in London, England, a young entrepreneur started a business that saw him turn roast coffee beans into bio-energy. Coffee became a fuel and began to drive not only sleepy Londoners every morning, but also industrial boilers in large buildings. Coffee and energy have long been closely related; the caffeine-rich drink boosts your energy levels and keeps you focussed and awake. In South Africa, coffee and fuel have once again been closely linked and it’s thanks to two of the country’s most pioneering businesses in their respective fields. Instead of using coffee beans to create energy for generators, Shell South Africa and Vida e Caffé began a partnership three years ago that is now flourishing and providing quality fuel for South Africa’s people and their cars.
Shell has a strong retail network of conveniently located service stations across South Africa and Retail Marketing Manager, Yaasier Abrahams says that having service stations that are welcoming and able to provide a quality Convenience retail offer including a strong branded coffee, has bolstered the company’s appeal.
“People’s lifestyles have evolved and consumers are looking for much more than just fuel when visiting a service station,” he says. “After conducting extensive research into the emerging trends in the South African market, Shell partnered with Vida e Caffé in 2013, as one of the strongest local coffee brands who were instrumental in establishing the coffee culture in South Africa over the past 15 years. Today Vida has over 50 high street stores outside of the Shell network and have become synonymous with a hip, vibey coffee experience entrenched in their Afro-Portuguese heritage.
“Over the past two years, Shell has invested significantly in refreshing its Convenience Store network and we’ve worked with Vida e Caffé to develop a fit for purpose format for the forecourt environment. Today we have well over 100 Coffee bars across the Shell network with the rollout set to continue across the Shell Select footprint over the next few years.
“Vida e Caffé started in South Africa and it’s been a phenomenal success. Customers love it because they know they can get a quality coffee experience that they find in the high-street stores in more and more Shell forecourts across the country.”
The ‘coffee culture’ in South Africa has lagged behind the rest of the world but in the last two years, an upturn has been reported. Stats SA report that coffee shops have seen a 7.1% increase in income since 2014 with impressive growth across the country.
Vida e Caffé CEO, Darren Levy says that coffee is certainly on the rise: “There is a surge in the number of people who are drinking coffee and this is impacting on product awareness and product quality. Africa and South Africa look set to be superb spaces for growth for the coffee industry with plenty of opportunities for great providers of great coffee,” he told Africabusiness.com.
Combining the quality product from Vida with the footprint of Shell has resulted in major successes for the business; Abrahams explains that feedback from customers has been positive.
“It’s been absolutely phenomenal,” he says. “I thinks it’s particularly because the Vida e Caffé brand is so strong locally. We’ve not had Starbucks, and McCafe by McDonalds is probably the closest to an international chain of coffee shops competing with our local brands that we’ve had in the market.”
And Shell isn’t just catering to certain customers in certain demographics. Offering coffee that suits different schedules, different prince points and different tastes is very important to the company so it has worked with Vida to create a new brand that focusses on quality coffee to suit various tastes and affordability levels but also provides an innovative food menu.
“We’ve also developed a secondary brand of Vida e Caffé called “Torrador by Vida e Caffé” and the Torrador brand gives you the quintessential coffee and experience but allows us to cater the food range to different trading environments given the positioning, equity, menu and price points of the Vida e Caffé brand. Depending on the trade areas, Torrador allows us to tailor the menus and price points to cater for things that suit the local market, particularly with regards to food,” Abrahams explains.
COMPLEMENTING EXISTING BUSINESS
Many of the Shell service stations are home to Shell Select convenience outlets which offer 24 hours, seven days a week shopping accessibility. Select stores carry a range of standard convenience items and stock the leading brands so that you are guaranteed to purchase fresh, quality products. There’s also regular promotional offers that are always worth keeping an eye on.
Interestingly, Abrahams says that since rolling out the Vida e Caffé outlets, the purchase of other convenience items and related products has increased.
“Where we’ve put in the coffee shops, we’ve seen the basket size in the store increase and we’re also seeing an uplift in fuel volumes because we’re attracting more consumers from the forecourt into our stores. The customer is spending more time in the shop whereas before customers might have just come for a ‘fill and go’.
“The good thing is that because the Vida e Caffé brand is so strong with local market, they’ve also developed a signature food range catering for breakfast, lunch and light meals that are appealing to the on-the-go consumers. If you look at the growth of the food category which has come with the Vida e Caffé experience, it’s been very encouraging,” he says.
Vida e Caffé in Shell Select stores, the same as in its own stores throughout the country, largely offers a full serve barista style sales model. This strategy has proved hugely popular in other parts of the world and it’s no different in South Africa. However, Abrahams is also keen to explore a self-serve model to again cater for a different segment of the market.
“With Vida e Caffé, their traditional model is a full serve barista model and that’s what we’ve got across most of the network. For other sites, where you wouldn’t traditionally have a full serve barista coffee offer, we’re also looking to develop a self-serve offer – take a look at Shell sites in the UK; they all have Costa Coffee but they are all self-serve.
“The full serve model makes sense as we’ve also got bakeries in our stores and with an energetic barista and freshly baked goods, the customers are very well catered for,” he says.
RAMPING UP THE ROLL-OUT
With over 100 Shell forecourts already home to Vida e Caffé outlets, Shell has plans to continue rolling out the partnership with a targeted approach for the rest of the network. This means that the quality coffee experience could soon be coming to a Shell Select store near you.
“We’ve taken a phased approach through segmentation; we’ve looked at where coffee would make the most sense, looking at national routes, looking at where the busiest sites are in terms of commuter traffic and what the consumer baskets are across the network, and we’ve rolled out there first. The rest of the network is soon to follow,” says Abrahams.
It is these offerings at the retail network that help set the business apart from its competitors (of which there is many) as the nature of the market for fuel in South Africa means that drawing people in with cheap fuel is not an option.
“In South Africa, the fuels market is regulated so the pump prices for petrol across all competitors is the same and this makes it difficult to attract new customers apart from making sure that you have a very strong brand and that you can leverage your global assets. We’ve got a 113 year heritage in the South African market and some of our other strong assets are our partnerships and fuel endorsements. We’re a technical partner to Scuderia Ferrari and that’s a long-standing relationship which has been going on since the 1960s and this reinforces the high quality fuels perception,” says Abrahams.
POWERFUL PARTNERSHIPS
Away from coffee, Shell’s fuels are recognised as being amongst the best in the world. Along with the Ferrari technical partnership, another strong Global Brand in BMW M also recently endorsed Shell’s V-Power Nitro+ Premium Fuels in 2015.
In the summer of 2015, to celebrate the BMW M V-Power Endorsement locally, Shell held a giveaway competition, offering five BMW 3-series to five lucky winners over five weeks.
“Last year, BMW M-power endorsed Shell V-Power Nitro+ performance fuels and our competition was an extension of that partnership in South Africa,” says Abrahams. “It had a fantastic response from consumers as the BMW and BMW M brands also have a strong heritage in the SA market and have a strong appeal with ordinary South African consumers.
“We’re partnered with one of the strongest coffee brands in SA, we’ve got both the Ferrari technical partnership as well as the BMW M endorsement for our V-Power fuels, so you can see that we’re starting build a very strong and compelling CVP both instore and on the forecourt,” he adds.
When people hear a name, they conjure up a set of impressions that influence how they think and buy, and those thoughts define a brand. All of the hard work being done by Shell in SA, building partnerships, innovative marketing and offering quality service to customers, contributes to the building of a brand that holds significant weight with consumers all over the country and further afield.
FOOT ON THE GAS
As a global company, headquartered in the UK and the Netherlands, Shell is constantly on the growth path. Currently, the growth and investment situation in the energy industry is not conducive to large scale advancement thanks to slumping oil prices but nevertheless, Abrahams is confident about the future of the South African market place thanks to an emphasis on investment into both new and existing infrastructure.
“Obviously, we’re looking for opportunities to grow all the time, particularly as South Africa has a growing population and a growing economy. We’re certainly looking to expand and also reinvest in the existing network so our strategy is to look at how we can enhance the offers at the existing sites and make sure that we offer South African motorists a welcoming customer experience whenever they visit a Shell forecourt.
“South Africa is seen as one of the growth markets for the Shell group,” he says. “The group has taken a long-term view on the future of South Africa and recognised that this is one of the markets that is going to be seeing growth and where it can realise a good return so the investment is definitely there. Given the fact that we have invested in the network already, we’ve shown that that is helping to sustain the business within the country. With the investment in enhancing our Convenience Retail Offer in addition to our strong and established fuels portfolio, we’re doing our best to ensure that our customers keep coming back,” he concludes.