Bean Me Up: Kopi Kenangan is Grinding to the Top


Kopi Kenangan is growing at an unprecedented rate, but can it become a global challenger?

When the first Starbucks store opened its doors in 1971 Seattle, few thought that it would become the US$44.5 billion international coffee conglomerate it is today. By conducting over 90 million transactions a week through its global arsenal of 30,000 stores, Starbucks as a franchise has continued to fuel the world’s ever-growing infatuation with coffee (DGajsek). 

It blazed the trail for the second wave of coffee, making your average cuppa more sophisticated and palatable for the average consumer. The group has been the Goliath that coffee startups like Luckin Coffee, Coffee Box, and Pacific Coffee have been aiming to compete with ever since. 

Another ambitious challenger, Indonesian coffee company Kopi Kenangan propelled its grab-and-go business model to a staggering $109 million Series B funding in May (The Jakarta Post). Its founders–James Prananto, Lewis and Carroll Tea founder Edward Tirtanata, and furniture startup Fabelio founder Christian Sutardi–are servicing every Indonesian’s love for Ngopi Ngopi, a term for coffee hangouts with friends and family (Forbes). 

Aided by the rise of Southeast Asia’s superapps, Indonesia has seen a plethora of food and beverage providers launch in the past few years, Kopi Kenangan among them. With the new funding, the company is putting even more ambitious plans into action to cement its status as a dominant regional player.

New kid on the block

Rahmat Budiarjo, Senior Vice President of Kopi Kenangan, says that the company doesn’t just want to be a good coffee provider at affordable prices. 

“We want to become the number one choice for the mindful consumer in Southeast Asia,” he adds.

Kopi Kenangan is defined by its proud embrace of local Indonesian culture (TechCrunch). Its signature beverage, Es Kopi Kenangan Mantan–which translates to “the memories of an ex-lover”–is just one example of how the company juxtaposes Western coffee culture with Indonesian colloquialism, creating a brand identity like no other (Forbes). Its commitment to sourcing local ingredients also sparks familiarity for Indonesians, seamlessly aligning with their tastes (Alpha JWC). Budiarjo says that this identity was essential to growing Kopi Kenangan’s loyal following. 

“When you take a look at our initial branding or marketing strategy, with all of the cheesy slogans […] people just liked it, and then it [became] one of the things that are copied by competitors,” he says.

The company currently has 342 stores across the archipelago (The Jakarta Post). After securing its recent Series B funding, Kopi Kenangan aims to expand to 500 domestic stores and soon penetrate neighboring markets (Forbes), as it plans to become the biggest coffee chain in Southeast Asia (Kopi Kenangan). But Budiarjo says that achieving this ambition could take some work on the branding front, given Kopi Kenangan’s Indonesia-specific branding. 

“In the Philippines or Thailand, [the name Kopi Kenangan] doesn’t resemble anything,” he says. “For other chains who do not have the mission or vision to expand to 500 stores [and are only] operating one or two stores, that’s fine. But for us, who want to expand our footprint, rebranding is a part of the strategy that we need to think about.”

A majority of Kopi Kenangan’s customers order its coffee through GO-FOOD, the food-delivery arm of Indonesia’s leading superapp, GO-JEK (The Jakarta Post). The widespread popularity of GO-JEK’s ridesharing and delivery capabilities has opened the door for high-volume data collection and sharing with its vendors–a service which Kopi Kenangan is keen on ‘deep-linking’ with to facilitate its expansion. Budiarjo says that deep-linking signals a collaboration with GO-FOOD on two fronts. 

“Number one is analytics–basically analyzing our customer base and devising a strategy […] for how we can target each customer segment,” he says. “Second is a heat map. We can see the sales of our competitors on a map level, and ideally, open stores closer to the customer compared to our competitors.” 

Déjà brew

Kopi Kenangan’s mind-boggling growth inevitably resulted in Forbes drawing comparisons to Luckin Coffee (Alpha JWC). The Chinese coffee franchise once boasted a $12.7 billion valuation, having opened 2,000 to 3,000 stores a year, saw that number drop to $731.5 million upon allegations of fraud and revenue inflation (Nasdaq). The company has since been delisted from NASDAQ (TechCrunch). 

One cannot help but note that Kopi Kenangan’s growth (of almost 200 stores in 2019 alone) is reminiscent of Luckin’s former glory (Insider Retail). Budjiaro says that Kopi Kenangan’s delivery model fundamentally sets them apart from Luckin, as choosing to partner with GO-FOOD, instead of developing a native delivery platform (as Luckin did), has allowed the company to keep costs at more sustainable levels. 

Budjiaro adds that Kopi Kenangan’s customer acquisition costs are considerably lower. Minimal marketing dollars were spent after Kopi Kenangan’s first location launched in the Standard Chartered building in South Jakarta (AlphaJWC). Thanks to its unique local brand identity, Kopi Kenangan was able to grow through word-of-mouth. 

“The cost of customer acquisition for Luckin is one of the highest in the market […] Right now, we are about one fifth, one-sixth of that. We constantly try to find a way to minimize this,” says Budjiaro. 

Moreover, Budjiaro adds that the majority of Kopi Kenangan’s transactions are processed through food aggregators, diminishing the risk of anyone inflating app purchase revenues. With any potential investor fears thus allayed, the company is prepared to move steadily along its planned trajectory for the next few years.

The sky’s the limit

Having secured big-name investments from AlphaJWC Ventures, Sequoia Capital India, tennis superstar Serena Williams, and rapper Jay Z in its Series B funding, Kopi Kenangan has cemented itself as a company at the forefront of the F&B space. Looking forward, Budiarjo predicts the digital future of F&B will take place via personalized cloud kitchens: consolidated networks of restaurants geared toward delivery (Forbes; The Food Corridor). 

“I think [the market] will grow in the direction of]cloud kitchens […] You localize your capacity to build drinks, snacks… and then deliver to [customers] at once,” he says. 

The company is also unaffected by Luckin’s fall from grace. Rahmat says that Luckin Coffee’s troubles are related to governance and auditor issues; one coffee company committing fraud doesn’t indicate a similar situation under the hood of other coffee brands. The cremains steadfast in its ambitions for an IPO, remaining mindful of maintaining smart and cost-effective day-to-day operations.

“We want to go IPO as well, probably in the next two or three years,” says Budjiaro, “But we’re not looking into any further funding in the short term pre-IPO […] because then, raising takes capacity [away] from running operations.”

Kopi Kenangan’s success is a manifestation of the value of a unique brand identity. Its pursuits in data analytics and personalization also shed light on how F&B is embracing digitization. If the Indonesian coffee chain continues down this path, it may very well become a globally recognized place for our daily dose of caffeine. 

Alvin is Jumpstart’s Editorial Intern.


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