By Choi Sung-jin
Koreans love coffee, so much so that you can see all kinds of coffee here ― instant and brewed, canned or bottled, and at franchise shops and convenience stores. One might think the domestic coffee market has long been saturated but it is far from that.
Convenience store 7-Eleven recently put to market "Seven Café," a brewed coffee brand, at just 1,000 won (86 cents). The chain rakes in 20 million won a day from its new coffee product alone. Its rival, GS 25, has also begun selling a similar product, "Café 25." Prompting the C-stores' participation in the coffee marketing war was a local franchise coffee shop selling Americano at 1,500 won, a third of the price of Starbucks coffee.
According to the Ministry of Agriculture, Fishery and Food, Koreans drink 12.3 cups of coffee a week, on average, far more than their consumption of rice, seven times a week, and of white cabbage kimchi, 11.8 times. Koreans' per-capita consumption of coffee stood at 2.3 kg in 2014, the fourth largest after the European Union, the United States and Brazil.
Korea is expected to import 140,000 tons of coffee, up 30 percent from 2014 and worth about $600 million, and its market is estimated to be 5.4 trillion won, recording a growth rate of 9 percent on annual average. There are about 49,600 coffee bars in the country, 1.5 times more than the number of convenience stores.
Industry watchers say the nation's coffee market will continue to expand, but not every player will benefit. According to the Fair Trade Commission, about 10 percent of the 10 largest franchised stores are shutting down. The operating profit rate of market leader Starbucks also fell to 5.3 percent, hitting the bottom in 10 years. Starbucks' counter-strategy is differentiation, as seen by the recent market debut of "Starbucks Reserve" shops that sell coffee at 12,000 won.
"In this marketing free-for-all, only those businesses who continue to develop innovative new products and a differentiated strategy will be able to survive," said Prof. Kang Byeong-oh of Chung Ang University.
Koreans love coffee, so much so that you can see all kinds of coffee here ― instant and brewed, canned or bottled, and at franchise shops and convenience stores. One might think the domestic coffee market has long been saturated but it is far from that.
Convenience store 7-Eleven recently put to market "Seven Café," a brewed coffee brand, at just 1,000 won (86 cents). The chain rakes in 20 million won a day from its new coffee product alone. Its rival, GS 25, has also begun selling a similar product, "Café 25." Prompting the C-stores' participation in the coffee marketing war was a local franchise coffee shop selling Americano at 1,500 won, a third of the price of Starbucks coffee.
According to the Ministry of Agriculture, Fishery and Food, Koreans drink 12.3 cups of coffee a week, on average, far more than their consumption of rice, seven times a week, and of white cabbage kimchi, 11.8 times. Koreans' per-capita consumption of coffee stood at 2.3 kg in 2014, the fourth largest after the European Union, the United States and Brazil.
Korea is expected to import 140,000 tons of coffee, up 30 percent from 2014 and worth about $600 million, and its market is estimated to be 5.4 trillion won, recording a growth rate of 9 percent on annual average. There are about 49,600 coffee bars in the country, 1.5 times more than the number of convenience stores.
Industry watchers say the nation's coffee market will continue to expand, but not every player will benefit. According to the Fair Trade Commission, about 10 percent of the 10 largest franchised stores are shutting down. The operating profit rate of market leader Starbucks also fell to 5.3 percent, hitting the bottom in 10 years. Starbucks' counter-strategy is differentiation, as seen by the recent market debut of "Starbucks Reserve" shops that sell coffee at 12,000 won.
"In this marketing free-for-all, only those businesses who continue to develop innovative new products and a differentiated strategy will be able to survive," said Prof. Kang Byeong-oh of Chung Ang University.
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