Cafe Amazon moves beyond petrol stations

Cafe Amazon moves beyond petrol stations

PTT's coffee shop unit has surpassed Starbucks in revenue and now seeks further growth

Cafe Amazon's shop in Muscat, Oman.
Cafe Amazon's shop in Muscat, Oman.

After 17 years in business, Cafe Amazon has become a crucial non-oil business for PTT, the national oil and gas conglomerate.

The coffee shop brand has 2,557 branches in many countries. Of those, 2,389 shops are in Thailand. The other 168 are sprinkled across Japan, Myanmar, Laos, Cambodia, Oman and the Philippines.

Established in 2001, Cafe Amazon was initially a PTT retail business at its petrol and gas stations, formed from the knowledge that fuel distribution alone could not be relied on.

The cafe has expanded in line with PTT's petrol stations nationwide and was a strategic part of transforming the company's business in 2001 from a wholly owned state enterprise to a listed firm on the Stock Exchange of Thailand.

Cafe Amazon now operates as a stand-alone at department stores, supermarkets and roadside locations.

Coffee shops have skyrocketed in popularity among local buyers after several international brands entered Thailand's red ocean market. US-based Starbucks is one of the most popular, with a competitive operation, loyal customers and a strong member system.

But Cafe Amazon has boasted strong revenue in recent years, including 10.3 billion baht in 2017 from Thai operations, while Starbucks tallied 7 billion. Thailand's overall coffee shop market is valued at 21.2 billion baht.

UBM Asia Thailand forecasts the coffee shop market to grow 15-20% because of popularity among Thais with higher purchasing power.

"There is more room to grow in the local market, as Thais consume 300 cups per person per year," UBM Asia said. "Japanese consume 400 cups and Europeans 600 cups."

Pilot coffee trees

Cafe Amazon's success started with coffee tree plantations more than three decades ago.

Initiated by King Bhumibol Adulyadej in 1974, the first coffee tree plantation in the northern region has reaped many advantages.

After the elimination of the opium fields that made Thailand one of the top drug exporters in the 1950s, this same land was replanted with coffee, creating a chain that improved the lives of several thousand families of growers, coffee traders and coffee shop owners.

Coffee plants also proved suitable for forest preservation, since they require less area and thrive alongside large trees.

Cafe Amazon is the largest buyer of coffee beans from the Royal Project, and PTT has worked with coffee tree growers under the inclusive business and social enterprise model, assisting in research and development of good-quality coffee tree species.

Cafe Amazon for Chance

Tevin Vongvanich steps down as PTT's president and chief executive today. He's handed over his corporate social responsibility (CSR) mission to his successor, Chansin Treenuchagron.

"PTT has more work to do, not only in benefiting from our core business, but also sharing the benefits with stakeholders, including clients, suppliers, creditors, shareholders and communities around assets worldwide," Mr Tevin said. "PTT has witnessed economic growth for several decades, but the persistence of rural poverty and poor standards of living require solutions provided by social enterprises."

The Cafe Amazon for Chance is a CSR activity that hires those with impaired hearing. Out of six workers in each shift, four staff members have hearing impairments. There are two work shifts per day.

The project was launched with four pilot shops during the second half of this year. Two shops opened at Mahidol University and the others at Baan Chai Praya on Thapra-arthit Road and the Ministry of Social Development and Human Security.

The pilot shops are equipped with dual touchscreens to help customers and workers at sales counters communicate. Automatic coffee blending machines are also installed with settings for the Cafe Amazon standard. Other features such as interior design, decorations and furniture are identical to those at other branches.

"The barista project works to help the disabled tackle difficulties in finding jobs," Mr Tevin said.

Under the Disability Act, the private sector is required to either set a quota for the disabled based on the size of the business or make financial contributions to the disabled fund.

Mr Tevin said that even before launching the CSR project, PTT employed disabled people to help design PTT's new petrol stations with facilities such as restrooms and parking lots for the disabled.

He said work gives disabled people a sense of pride, much more so than accepting donations.

After this pilot scheme, Cafe Amazon may open a social enterprise or cooperative for the disabled to own and operate in the coming years.

New opportunity and company

Cafe Amazon contributes roughly 60% of PTT's non-oil revenue.

The coffee shop unit will be part of a new subsidiary, PTT Oil and Retail Business Co (PTTOR), which will list on the stock market by mid-2019.

PTTOR's main business is fuel retail and wholesale, representing 80% of 2017 profits, while its non-oil business accounts for the rest.

The company aims for the non-oil unit to contribute 30% of profit over the next five years.

PTTOR operates 1,894 petrol stations. Of those, 1,662 stations are operated locally and an additional 232 outlets are in Cambodia, Laos, Myanmar and the Philippines.

Overseas, new branches will open in Singapore and China this year.

PTTOR expects to expand the number of Cafe Amazon branches to 4,000 by 2023, spanning 14 countries.

PTT president Tevin Vongvanich opened the Cafe Amazon in Oman this month.

Mr Tevin uses sign language to order a cup of coffee at the Mahidol University store.

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