Dongsuh sells 1 bil. Starbucks RTD beverages in Korea

The Korea Times

The Korea Times

Business

Thu, November 30, 2023 | 00:29

Companies

Dongsuh sells 1 bil. Starbucks ready-to-drink beverages in Korea

Posted : 2023-07-30 16:47

Updated : 2023-08-04 17:56

David Hanson, vice president of global channel development at Starbucks Asia Pacific, poses with Dongsuh Foods' Starbucks ready-to-drink beverages at a resort on Jeju Island, Thursday. Courtesy of Dongsuh Foods

Starbucks executive vows to continue strong partnership with Dongsuh, introduce new coffee products for local consumers

By Kim Jae-heun

JEJU ― Dongsuh Foods and Starbucks have marked cumulative sales of 1 billion Starbucks ready-to-drink (RTD) coffee beverages in Korea since 2006 when they launched the joint business. The achievement is meaningful for both firms as they pioneered the local RTD market, which was scaled at only 170 billion won ($133 million) 17 years ago. In 2022, the market reached 1.45 trillion won.

"Any time you hit a billion, this means you reached a critical mass. You have a reason to celebrate," Vice President and General Manager of Global Channel Development at Starbucks Asia Pacific David Hanson said during an interview with The Korea Times, Thursday.

"People have been engaging with you, they are loyal to the brand and you had a long-term future. A billion is something to pause and recognize and think about how you get to 10 billion."

In 2005, Dongsuh signed a contract with Starbucks to manufacture and market its branded coffee beverages here. Starting with the launch of three types of Starbucks Frappuccino bottled coffee in 2006, they have stayed together ever since by gradually expanding their product lines to include cans, cups, and PET bottles.

Starbucks AP Vice President David Hanson speaks to The Korea Times during an interview at a resort on Jeju Island, Thursday. Courtesy of Dongsuh Foods

Starbucks RTD has maintained its unique Starbucks premium branding and has been conducting business with quality, innovation and communication with consumers as the most important factors.

"Based on Dongsuh's outstanding technology, it has introduced RTD products that embody Starbucks' premium coffee quality. In addition, I think it is because we have met the needs of consumers for premium coffee products by continuously introducing new products in various forms," Hanson said.

Starting with about 3.5 million items sold in 2006, sales exceeded 50 million in 2010, 70 million in 2019, 100 million in 2022 and 1 billion, this year.

Starbucks' three most popular RTD items by sales in 2022 were its Caffe Latte drink at number one with 23 million units, Frappuccino Mocha at number two with 9.8 million units, Double Shot Espresso can at number three with 8.1 million units.

Hanson said the RTD coffee market has shown a prominent growth during the COVID-19 pandemic and it is still growing along with the coffee retail business.

"Of course, Starbucks retail stores are our main business, but the beverage market for RTD drinks is also important, especially in the Asia-Pacific region, where the products are more diverse and segmented than in America and continental Europe," Hanson said.

"While the global high-capacity RTD market has been growing for a long time, the Asia-Pacific beverage market also has a steady need for premium RTD and small-spec markets."

Dongsuh will continue to strengthen the premium image of Starbucks and continue to release new products linked to the Starbucks retail menu to further strengthen its position as a premium brand in the Korean RTD market.

"The Korean beverage market is growing and diversifying faster than other countries. Korean consumers have a strong need for new flavors, and in particular, recently, there has been a growing interest in health-conscious drinks in the beverage line," Hanson said.

jhkim@koreatimes.co.kr