Why We Partnered

Why We Partnered with Pickup Coffee: To build Philippines' leading new age coffee brand

May 3, 2023
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Why We Partnered

Why We Partnered with Pickup Coffee: To build Philippines' leading new age coffee brand

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Why We Partnered with Pickup Coffee: To build Philippines' leading new age coffee brand
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We are thrilled to announce our investment in Pickup Coffee, an insurgent brand at the forefront of defining the next generation of coffee in the Philippines. Founded in 2022 by Diego Lorenzo, Pickup provides high-quality coffee at disruptively low price points for all Filipinos. Its goal is to be the Philippines' premier "grab-and-go," digitally native coffee brand spearheading a new retail model experience for its customers. DSG Consumer Partners believes that Pickup will be the Philippines' new-age coffee brand. Here's why:

Smelling the fresh aroma of opportunity around Southeast Asia's largest coffee market

Founded in early 2022 by Diego Lorenzo, Pickup opened its first outlet launched in March 2022 and within a span of a year, now operates over 60 outlets across the Philippines. The inception of Pickup occurred when Diego, whose family has been in the F&B business for decades, realized that while Filipinos loved their coffee, the market gravely underserves the country's rising middle class. Although the Philippines represents Southeast Asia's largest coffee market with the region's highest per capita coffee consumption at 3.6kg per capita (vs Vietnam: 2.0kg per capita, Indonesia: 1.0kg per capita), [1] it was flooded with two options: a lower-end mass market comprised of local mom-and-pop stores, and a higher-end premium market that is unaffordable to the majority of Filipinos.

Founding team from left to right: Diego Lorenzo (Founder & CEO), Kiko Macaalay (VP of Operations), Bien Lee (VP of Marketing) and Jamie G. Fernandez (VP of Strategy).

This gave rise to Pickup Coffee, high-quality coffee beverages with extremely affordable prices relative to its competitors, all while offering flavours and variants catered specifically towards the Filipino palette and a new experience for how coffee is consumed by Filipinos. Today, its iconic carts can be seen across high-density areas in Metro Manila and beyond. Pickup also has a network of cloud stores and its own fully integrated mobile platform that services the greater Filipino population that wants on-demand, online deliveries straight to their doorstep.

Pickup beverages use only Single Origin Arabica beans, and yet its offerings are priced at a 50% discount to premium players such as Starbucks. Prices start at PHP 50 (USD 0.90) and nothing goes above PHP 100 (USD 1.80). Apart from Pickup's hyper-localized menu of delicious and affordable espresso and milk-based beverages, there are also Pickup Bites, its ready-to-eat buns, rolls, pastries and other convenient eat-on-the-go snacks. Options include pork floss rolls, garlic butter breads, smoked bacon twists, chocolate chip cookies and other indulgent delights. Pickup collaborates with other local brands to provide its customers with fresh new options every month.

All in all, Diego's obsession with providing his fellow countrymen and women with great coffee delivered through excellent service is what makes us at DSGCP, extremely excited for what is to come. We are proud that Pickup echoes many of DSGCP's core investment themes, including "Millennials, Gen Z & Gen Alpha," "The Digital Consumer," and "Eating On The Go."

Coffee in the Philippines: A Massive Market Overdue For A Delicious Makeover

The Philippines represents Southeast Asia’s largest coffee market with the region’s highest per capita coffee consumption due to its influence from Western cultures. Its coffee market stands at USD 5.82 billion, with an 8.75% CAGR between 2022-2025. [2]On the macro fundamentals, the Philippines experienced a robust average GDP growth rate of 8.2% between 2020 and 2022 [3], driven by private consumption which accounts for nearly 77% of GDP. [4]

It is a Millennial-driven economy, being the 2nd most populous country in Southeast Asia with a population of 110.3 million with a median age of 25. [5]17% of the Philippines’ GDP is driven by Business Process Outsourcing (BPO), creating a workforce with deep cultural and language alignment with the Western world. [6]

The Philippines has also experienced a shift in food purchasing behaviours, favouring more digitally enabled, takeout and delivery businesses. It is projected that by 2025, 69% of spending and 12% of volume consumption in the Filipino coffee industry will be attributable to out-of-home consumption. [7] The Philippines has 74 million internet users with a penetration of 67%. The Filipino internet economy sat at USD 16 billion in 2021 and is projected to reach USD 40 billion by 2025 with the highest CAGR in the region of 35% between 2020 – 2025. While consumers were forced to use online services during the COVID-19 lockdowns, 95% of new digital Filipino consumers have indicated their intention to continue using these services post-pandemic. [8]

This is perfect for Pickup’s technology development and digital-first strategy. Pickup has developed its mobile application, which enables the company to utilize a fully integrated platform that optimizes the company’s plan to scale. Through it, customers have access to state-of-the-art UI/UX, are able to order online through a seamless one-click ordering process, skip lines through real-time order monitoring, and have access to loyalty programs to earn rewards. Pickup will have data to balance order loads to increase throughput and reduce wait times. Gamified, AI-driven suggestions will boost retention rates and heat maps from delivery and cloud data will inform future store rollouts.

Rising pride in Filipino-made

The Philippines’ premium coffee market has largely been dominated by international, high-priced chains, whose price points, flavours, and approach to the consumer are out of touch with most Filipinos. The country is home to over 650 McCafés, 420 Starbucks, 156 The Coffee Bean & Tea Leafs, 70 Bo's Coffees, 55 Coffee Projects, 41 Tim Hortons and 35 Seattle's Best Coffee outlets. Similar to examples in neighbouring countries such as Luckin Coffee in China and Kopi Kenangan in Indonesia, we believe that Pickup will pick up the mantle of being the local disruptor!

Great Coffee with a Greater Purpose

Pickup stands tall for its employees and partners, just as much as it does for its customers.

  1. Pickup's main coffee supplier partners directly with international and local farmers in the Philippines (Davao Del Sur and Bukidnon). The company's direct partnership with the farmers eliminates potential exploitative practices of middlemen within the industry.

  2. Pickup believes in gender equality, especially in employment. As of December 2022, the company consisted of 250 male and 244 female employees. It hires people solely based on their experience, soft and hard skills, and growth potential. Pickup is firm in its policy of never carrying any practice which precludes any gender, sector, ethnicity, or religion from having a fair chance at employment.

  3. Last but not least, Pickup Coffee strictly follows all labour codes, as stipulated by the Department of Labor and Employment (DOLE), with regard to good practices including wages, leaves, health insurance, and other employee rights.

Taking the fight to the majors and redefining the way Filipinos get their daily pickup, through Pickup Coffee

With a superior product offering, disruptively affordable price points, an obsession for customer service experience, robust unit economics, tight capital efficiency and the right team to bring it all together, DSGCP is confident that Pickup will become the leading brand in Filipino coffee. Pickup has the fundamentals of great insurgent consumer brands and we believe it has the potential to redefine the coffee experience for the Philippines. We are thrilled to support Diego and his team on their journey to make Pickup every Filipino's coffee of choice.

Foot Notes:

[1] USDA, World Bank. Consumption data for the period 2022/23

[2] Statista, Consumer Markets, Coffee Report 2022, Philippines

[3]Philippine Statistics Authority

[4]Statista, Consumer Markets, Coffee Report 2022, Philippines


[5]Statista, Philippines

[6]ASEAN Briefing, Business Process Outsourcing in The Philippines

[7]Statista, Consumer Markets, Coffee Report 2022, Philippines

[8]Google, Temasek and Bain & Company, e-Conomy SEA 2021

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