Caracas cafe culture flourishes as Venezuela dollarizes economy

December 14, 2021
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Restaurateurs Melanie Angulo and Marwin Hernandez have begun serving lattes and specialty coffee in a small storefront in downtown Caracas, joining a new wave of cafe entrepreneurs encouraged by creeping dollarization in Venezuela.

Cafes are springing up across the teeming capital, their owners hoping the currency change will spur green shoots in an economy scorched by seven years of severe recession and hyperinflation.

The new outlets slinging flat whites and cortados (espressos) are no longer just in upmarket eastern Caracas – with its leafy streets, expensive restaurants and large homes – but in the bustling streets of the city center.

“There are many cafes in the east of the city, but they are needed in the center,” Angulo said. “We all need a distraction.”

Although cafes have existed for years in the South American country, they have not been as abundant or glamorous in Caracas as in other capitals across South America, like Buenos Aires with their awnings and fine pastries.

Venezuelans, in fact, have typically drunk their coffee in their homes or in bakeries.

Now, however, about 20 cafes – from chains with their own coffee brands to small family shops – have opened this year in eastern, central and southern Caracas, while provincial cities such as Valencia and Barquisimeto are following suit.

“Coffee is all the rage,” said Pietro Carbone, a coffee shop owner and president of an academy that trains baristas, aiming to capitalise on consumer demand for higher quality. “Now there are young people pushing to make better coffee.”

The trend emerged after socialist President Nicolas Maduro decided at the beginning of 2019 to relax price controls and allow for widespread transactions in foreign currency, which had previously been forbidden.

The move has given Maduro’s government and businesses breathing space while grappling with a protracted recession and U.S. sanctions.

As stores with imported goods sold in dollars, known as bodegones, have flourished, the number of shops offering national and imported coffee has also multiplied.

Until the middle of last decade, Venezuela exported coffee but with the onset of the economic crisis production fell, amid price controls and nationalizations.

With the relaxation of economic regulations, some coffee growers have been able to increase the cost of a bag of beans, but the boom in coffee shops has yet to impact production, which is remains around 500,000 quintals per year, according to producers, just half of what it was 15 years ago.

“Less than 10% of coffee growers produce gourmet coffee, which is what the new stores use,” said Diolegdy Paez, director of Fedeagro, an organization of agricultural producers.

The cost of a coffee in the new shops ranges between $1.50 and $5, a price unheard of in Venezuela before dollarization and prohibitively high for many in a country where the minimum wage is equivalent to about $3 a month.

“Those who used to go to a restaurant now go to a cafe, because it gives them enjoyment at a lower cost,” said Ivan Puerta, president of the national chamber of restaurants.

Entrepreneurs and analysts say that while small businesses are able to operate because of the use of dollars and euros, deregulation is still insufficient to offset the broader economic collapse and weaknesses in basic services.

In Venezuela, aside from hyperinflation, business owners have to spend extra money on water tanks and power plants to fill in the gaps of decrepit public services.

After losing his job as a pilot during the coronavirus pandemic, Enrique Perrella opened a cafe in eastern Caracas in December that offers Italian coffee and desserts.

Since July, his store has had more visitors but he has yet to recover his investment. Nevertheless, he believes it is a good moment for Venezuelan entrepreneurs.

“We believe that we must invest,” he said.

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