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.

The China Post - - BUSINESS - BY YUEH- LIN MA

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

Cof­fee Cul­ture

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.

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