Golden age of coffee in Asia dawns as a distinct coffee culture starts to take shape
As more people in Asia enjoy drinking coffee, the region has become No. 1 worldwide in the consumption of the ‘black gold,’ surpassing Europe and the United States.
A cup of coffee helps one unwind, relax and regain peace of mind.
This fragrant beverage is currently challenging the popularity of other drinks around the globe — alcoholic beverages in Europe, Coke and other carbonated soft drinks in the United States, as well as tea in Asia.
As early as 2011, the business news site Business Insider pointed out that coffee has already outstripped gold and natural gas as an important commodity, with a global value exceeding US$100 billion, or NT$3 trillion, second only to crude oil.
And the price of coffee has continued to rise in recent years. Late last year, as crude oil prices continued to fall, the price of coffee skyrocketed due to drought-related supply shortages. The “black gold” beverage is finally living up to its name.
The golden age of coffee is quietly dawning in Asia as consumption grows. The tea-sipping continent is not only switching to coffee; Asia is also emerging as a coffee cultivator, coffee roaster and coffee brand creator. A distinct Asian coffee culture is subsequently taking shape.
Meanwhile, Asia has a
pres- ence in every step of the coffee supply chain, from production to consumption. Different countries in Asia play different roles within the coffee industry, specializing as producers, technology providers, brand managers, marketers and promoters of coffee culture. As consumers develop a greater craving, entrepreneurs get more excited over increasingly lucrative business opportunities.
In March of 2014, the International Coffee Organization (ICO) released a report on Coffee Consumption in East and Southeast Asia 1990-2012. The report points out that Asia has increasingly become the focus of the world coffee industry in recent years. Asia has seen “the most dynamic growth in coffee consumption in the world,” posting an average growth rate of 4.9 percent since the year 2000.
The ICO study, which covered 16 countries in East and Southeast Asia, observed that more developed East Asian markets like Japan, South Korea and Taiwan tend to have a higher percentage of Arabica consumption and a more developed specialty coffee industry. Southeast Asian markets such as Indonesia, Malaysia, the Philippines and Thailand show a higher demand for Robusta coffee (a coffee variety used in instant coffee), canned coffee and other ready-todrink flavored mixes.
China Coffee Consumption
In China, Asia’s largest market, coffee consumption has been growing as fast as 10 percent per year since 1998. Although the per capita consumption of China’s 1.3 billion people stands at just 47.6 grams per year compared to 2.2 kg in the former British territory of Hong Kong, Chinese coffee consumption could reach a level equal to the current level of consumption in Britain by 2020 if current growth rates are maintained. This makes the Chinese market “a particularly promising prospect” for the global coffee trade, the study said.
While the 16 countries in East and Southeast Asia included in the study boast 31 percent of the world population and 29% of global GDP, they accounted for only 13.8 percent of world coffee consumption in 2012. Given that coffee consumption has been growing vigorously for some time, the region holds strong potential.
In Taiwan, the ICO study points out a “significant increase” in per capita consumption from 0.4 kilograms in 1990 to more than 1 kilogram in 2012. Meanwhile, Taiwan boasts more than 10,000 coffee establishments. More importantly, Taiwan is one of the top importers of Arabica in the region. This means that Taiwan’s coffee culture has become relatively developed as the island’s increasingly urbanized consumers continue to move away from soluble and canned coffee.
As the rapidly rising figures above show, the coffee craze sweeping across Asian cities is unstoppable. While global coffee shop chains dominate major crossings and street corners with their glitzy glass shop fronts, independent caf?s run by individual coffee enthusiasts are tucked away in narrow lanes and alleys.
Across Asia, the urban coffee cultures of Ho Chi Minh City, Seoul, Shanghai, Taipei and Tokyo hold many flavorful surprises.
Japan: The Most Developed
In February, the hottest topic in Japan was the opening of a trendy coffee shop by Californian chain Blue Bottle Coffee in the Kiyosumi area of Tokyo, the first such outlet outside the United States. In the first week of the store’s operation, customers stood in line outside for up to three hours to get their coveted coffee.
While global coffee shop chain Starbucks hails from Seattle, Blue Bottle Coffee calls San Francisco home. The company, which opened a second coffee bar in Tokyo’s Aoyama District earlier in March, is considered the epitome of the thirdwave coffee shop boom in Asia, and is also known as “the Apple of the coffee shop world.”
The first wave introduced light roasted American- style coffee, whereas the second wave belonged to the dark roasted coffee creations concocted by coffee chains like Starbucks. The third wave responds to even more sophisticated consumer demands as coffee lovers begin to order brewed drinks based on the beans’ place of origin, processing method and roasting process.
That Blue Bottle Coffee chose Tokyo as its first location abroad not only shows the strong interest of American and European coffee roasters in the Asian market, it also highlights the fact that Japan’s highly sophisticated coffee house culture is drawing attention abroad. Blue Bottle Coffee founder James Freeman personally admitted that he has been inspired.
“The Japanese are the most discerning retail customers in the world,” Freeman told a press conference marking the opening of the first overseas branch in Tokyo. “If we can make them happy, then think of what we can bring back to our cafes in San Francisco, L.A. and New York.”
Japan has always been the thirdlargest coffee importer, behind the European Union and the United States. In the country’s hotly contested coffee market, domestic and foreign chains are crowding out independent coffee houses. Homegrown coffee shop franchise Doutor Coffee is the largest chain, with 1,106 locations across the country, while Starbucks comes in a close second at 1,034 outlets.
Starbucks also used Japan as its first overseas testing ground when it entered a joint venture with Sazaby League in October of 1995, opening the first Japanese store the following year. Last September, Starbucks Corp. announced plans to buy the remaining 60.5 percent share of Starbucks Coffee Japan Ltd. from its joint venture partner, citing the high profitability of the Japanese outlets.
“Shanghai has more Starbucks stores than any other city in the world in which we operate,” John Culver, group president China/Asia Pacific, told the annual shareholders meeting on March 18. “Over the next five years, this region will grow three times in size, and Starbucks’ store footprint will double to 10,000 stores across our 15 markets,” Culver said. His announcements were met with even greater applause from shareholders than the profit figures.
Starbucks has seen 20 consecutive quarters of revenue growth in the Asia-Pacific region. In late March, it opened its 5,000th store in the Asia-Pacific, again in Japan.
Starbucks CEO Howard Schultz speaks while photos of coffee cups with #RaceTogether written on them are projected behind him at the coffee company’s annual shareholders meeting in Seattle, on March 18.