After the Bell: Caffeine’s supply chain complications

Most of my mornings start in the same way.

There’s the daily trip-over-one-of-the-dogs (it’s always the same one), the great care taken not to step on a cat (for reasons that passeth human understanding, stepping on a dog is the dog’s fault, stepping on a cat is your fault), the switching-off of the alarm, the fumble with the keys and the final opening of the house.

After that nothing takes precedence over the switching-on of the kettle.

Finally, I get to make my coffee.

And while I do all of this, I give not a thought to how complicated it is to get the right kind of coffee in the right place to make money out of it.

On the Money Show on Wednesday night I spent half-an-hour speaking to Adrian Maizey. He may not be someone you think of very often, but if you have ever been into a Starbucks, he is the coffee god you have to thank.

Long story short: he’s the second-most successful Pretoria Boys old boy to go to the US, where he started a company and ended up buying the licence for Starbucks here.

As part of my reading before the interview I discovered something that blew my mind.

According to my research, and confirmed by him, there are about 80,000 (that’s EIGHTY THOUSAND!!) different combinations of drinks that you can get at Starbucks.

Now, that sounds like a lot... because, you know... it is!

But when you consider what you can get at a coffee shop nowadays it does make sense.

I’m one of those simple people (careful, please!) who is very happy with an Americano and, perhaps, a touch of milk. My disdain for those who want more than just a drop of milk in their coffee is probably well known to you, I won’t bore you with my views again.

But that’s just the tip of the frappuccino.

You can get normal (by which I mean, hot) coffees which include things like caramel and even, I’m told, pistachio coffee (up until that point I’d always thought that a pistachio was a nut that reminded me of The Incredible Hulk).

Then there’s the cold stuff, including something called an “Iced Brown Sugar Oatmilk Shaken Espresso”. This is an example of someone using a huge number of words to express something, and yet I still don’t know what it is.

Is it a bowl of porridge in a very small cup? Or a stiff coffee with a dollop of sugar?

Then there are “refreshers”, which apparently come in flavours like “Strawberry Acai”. I had to look it up, and Google’s latest AI engine tells me an “acai” is a type of berry.

So this is a bi-berry flavoured drink then?

These refreshers also come in “Dragon Coconut” flavour, which sounds like an uncommonly fiery experience for an early morning drink.

Oh, they also sell teas. Apparently.

It’s no surprise then that in the US Starbucks has recently had major supply chain problems.

Reuters did one of those wonderful reports where they spoke to a huge number of people, including experts and previous executives at Starbucks, and found videos of baristas literally having to throw stuff away.

This is because the supply issues meant some stores had too much of the wrong thing, while others didn’t have enough milk or even lids to go on coffee cups.

And as anyone who lived through Joburg traffic this week knows, life without coffee cup lids is really not worth living.

One of the real insights from the US situation is that it appears that over the years Starbucks had not upgraded their IT infrastructure properly.

Now, if you’ve ever seen the phrase “SAP System” in the business section of any publication you know immediately that it means the company involved has a supply problem. And that IT is at the bottom of it.

It also seems that AI might be very clever and all that, but it cannot count cans and bottles on a shelf in the same way a human can.

But the other problem for Starbucks in the US is that they have too many small suppliers when they should have fewer, bigger suppliers. But you can imagine the stress of going through contract after contract through all 50 states and goodness knows how many cities and towns.

Here, happily, Starbucks doesn’t seem to have any of these problems.

Maizey says that’s because whenever you go to a Starbucks here, most of the ingredients for any of the 80,000 combinations you’re drinking have been imported. And for him, his main supplier is Starbucks US.

That said, he does say he and his team spend most of their time fretting about whether the stuff on the high seas on its way here is going to arrive before it goes off.

Essentially he says running a coffee chain is really running a supply chain business.

It’s something I’ve never really thought about.

Especially when there is a dog sitting just where I’m about to put my foot. DM