Cafes. The owners denounce the agreement on prices

Cafes. The owners denounce the agreement on prices
Cafes. The owners denounce the agreement on prices

Stung by the Competition Council, cafe owners consider the decision of the institution headed by Ahmed Rahhou to be an unfair simplification of reality.

Coffee is undoubtedly the favorite beverage of Moroccans. An immutable ritual from early morning, it promotes communication and sharing, sipped as desired during cigarette breaks, and elegantly completes meals. According to Fitch Solutions, the financial data specialist, Morocco ranks as the second largest retail market for coffee in the MENA region (13 billion dirhams spent by households for the 2022 financial year), with growth estimated at 3.3% per year.
Taking advantage of the widespread passion for caffeine, establishments serving this energy drink have flourished over the years. From neighborhood cafes to trendy brands, their number has skyrocketed to over 60,000 units.

Price agreement

From now on, these establishments find themselves in the crosshairs of the Competition Council. In a press release published on April 30, 2024, the Council notes following preliminary investigations carried out by its services, that certain owners and managers of cafes are studying a possible increase in the prices of drinks served in cafes. The information, relayed by the media, raises concerns about possible anti-competitive practices in the market for drinks served in cafes.

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To put an end to this wave of rumors, the Competition Council recalls that, under Law 104.12 on freedom of prices and competition, “the determination of the prices of products and services must be done according to the mechanisms of the free competition, with the exception of cases specifically provided for by law. It also emphasizes that “concerted actions, conventions, understandings or coalitions, explicit or implicit, are prohibited, whatever their form or motive, when they aim to or may have the effect of hindering, restricting or distorting the free competition in a market. Consequently, current legislation prohibits professionals from discussing or setting prices or profit margins.

“A swirl in a cup”

For most well-established tenants, this controversy has no reason to arise. “As the Arab proverb would say, it’s a whirlwind in a cup,” says Mohamed Abdelfadel, Secretary General of the Moroccan federation of cafes and fast restaurants. This perspective is not isolated among café owners and managers who for their part believe that the initiative is disproportionate to the realities of the sector.

For them, if price is a significant factor, the dynamics of competition at this level are often poorly understood. “The Council obviously has the power to impose measures to improve the competitiveness of the market, in accordance with the legal provisions in force,” he concedes, “but we are not simple coffee merchants, but rather service providers. services,” he denies.
For professionals in the field, there is confusion between the drink and the establishment where it is served.

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“Coffee is indeed a product when you buy it from a supermarket. For us, in this case, it is only one component of our service,” explains Mohamed Abdelfadel. He insists on the fact that this nuance escapes the institution headed by Ahmed Rahhou, which should direct discussions towards the diversity of services offered, rather than on the price of the drink.

Especially since in terms of pricing, determining a clear line is complex due to fluctuations due to inflationary pressures. “It has not escaped your notice that an increase in the price of a dirham or two does not make sense when the price of roasted beans has skyrocketed with inflation, with a price varying between 80 and 650 dh/ kilo,” protests Abdelfadel.

Another argument put forward by the owners: the multitude of services offered such as Internet access, entertainment, parking, etc. which play a major role in the experience offered by the café, justifies the price differences, and which, however, does not are not taken into account in the Council’s reading grid. Unanimously, they agree that their job goes far beyond serving coffee.

Sectoral fragmentation

In the microcosm of Moroccan cafes, the fragmentation of sectoral representation proves to be a major challenge. In the absence of a unified federation, replaced by a string of associations – around thirty to date – the sector suffers from a lack of cohesion which hinders effective dialogue with regulatory authorities. This situation dilutes the influence of cafe owners during negotiations and regulatory confrontations, where a unified voice would otherwise be more audible to governance bodies.

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This heterogeneous panorama is also reflected in the diversity of economic models of literary salon cafés, or establishments with gaming spaces such as billiard cafés, each adapting its offer to a specific clientele. Which raises questions about the fair treatment of establishments regarding the pricing practices applied. “There are salons and cafes that charge prices well above the rest, are we going to penalize them for that?” asks the manager of a café in the city center of Marrakech.

In this context, the intervention of the Competition Council is perceived as inappropriate by professionals in the sector who deplore a lack of understanding of the complexity inherent in their sector.

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