Photographer: Tim Boyle/Bloomberg

Cofix Enters Russia With Coffee at Fraction of Starbucks Prices

  • Israeli chain begins international expansion with Moscow site
  • Founder Avi Katz says chain is considering entering U.K. next

Cofix Group Ltd., an Israeli operator of a low-cost coffee chain, began expanding abroad with a cafe in Moscow, seeking to lure Russian consumers with cappuccino at a fraction of Starbucks Corp.’s price amid the country’s worst recession in two decades.

The cafe will sell all its items -- coffee, soft drinks, and food -- at 50 rubles ($0.80) each, Cofix said at in a statement Monday. Starbucks charges 120 rubles for espresso and 245 rubles for cappuccino in Moscow. Cofix is targeting 100 Russian stores by mid-2018 and is considering entering the U.K. market next, founder Avi Katz said.

Since the Tel Aviv-based company was created in 2013, the chain has grown to 152 shops in Israel, disrupting rival coffee shops and sparking a price war. The discounter has picked Russia as its first market for expansion because rental costs have plummeted and consumers have become more price-sensitive amid high inflation, Katz said.

“In Russia, it costs 20 rubles to make a cup of coffee at home, while most coffee shops are offering it at about 200 rubles: this is probably the widest difference in the world,” Katz said in an interview in Moscow. “I am bringing in the new market, so that people who used to drink coffee only at home can afford it in a cafe.”

Unlike Starbucks, which offers armchairs where customers can sit and work for hours, Cofix focuses on coffee on-the-go and has limited seating. The number of coffee shops in Russia is increasing 10 percent this year, driven by mid-sized and takeaway chains, according to researcher Allegra World Coffee Portal Ltd., which estimates the market is worth more than $1 billion. 

Katz said he sees potential for as many as 1,000 shops in Russia within five years, including franchises.