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  • Japanese Coffee Titans Brew Expansion Strategy to Rival Starbucks in India and Southeast Asia

    Japanese Coffee Titans Brew Expansion Strategy to Rival Starbucks in India and Southeast Asia

    Japanese-themed full-service café chains are accelerating their proliferation across India and Southeast Asia. They are banking on the allure of their high-end atmosphere and Japan-centric menus to the emerging middle and upper-class consumers in these regions.

    Emergence of Full-Service Cafés

    Coffee-Kan, a full-service café where customers place their orders at the table and enjoy comprehensive waiter service, is gearing towards inaugurating its debut international outlet in India by 2027. The company is targeting to set up 60 stores throughout India and Southeast Asia within the next decade.

    Targeting urban office-goers and middle to high-income consumers in cities like Mumbai and Bengaluru, café operator C-United anticipates an average spending to surpass JPY2,000 yen (US$12.90), which is over double its average expenditure in Japan.

    The number of international café chain outlets in India saw a 13% hike in 2024 from the preceding year, tallying up to around 5,300 outlets. Leading the pack was Starbucks, followed by native brands Barista and Café Coffee Day, all of which only offer counter service. Industry experts believe that full-service cafes have a high growth potential.

    “Full-service cafes are gaining in popularity as a space where office employees and university students can relaxingly spend longer durations indulging in food, reading, and socializing,” remarked Takanori Higuchi of the Japan External Trade Organization office in New Delhi.

    C-United’s President Yuki Tomonari commented that “there is a demand for more expensive options in the full-service café format.”

    Thriving Market Potential

    Market research company Euromonitor International predicts that by 2030, India’s middle to high-income population will leap to over 40% from just 10% in 2020.

    Another Japan-based firm, Doutor Nichires Holdings, has plans to inaugurate the first international branch of its full-service concept Kanno Coffee in Taiwan by March 2026. The chain, which currently operates 12 outlets chiefly in urban areas in Japan, will spotlight matcha-based offerings in Taiwan and anticipates an average customer spending of approximately 1,000 yen.

    Doutor Nichires has already opened roughly 20 branches of its Hoshino Coffee brand across Taiwan and the Philippines. Kanno Coffee boasts numerous Japanese-style menu items that incorporate matcha,” observed President Masanori Hoshino. “We believe it will be successful even at a higher price point than Hoshino Coffee.”

    Komeda is also broadening its reach in Taiwan and Indonesia, managing about 80 international stores compared to 18 as of February 2021.

    Questions & Answers

    What does the term ‘full-service café’ refer to?
    Full-service cafes offer a dining experience where customers place their orders at their tables and enjoy complete waiter service.

    What are the expansion plans of Coffee-Kan?
    Coffee-Kan plans to open its first overseas outlet in India by 2027 and aims to establish 60 stores across India and Southeast Asia by 2030.

    What is the special offering of the Kanno Coffee chain?
    Kanno Coffee, a chain run by Doutor Nichires Holdings, places special emphasis on matcha-based offerings at its outlets.

  • Freshly brewed coffee is rising in China

    Freshly brewed coffee is rising in China

    Although Luckin Coffee, a chain of coffee shops in China,  disclosed a loss of 857 million yuan (RMB) last year, they are still positive about the potential for growth in China. Meanwhile, a Canadian coffee brand, Tim Hortons, announced its expansion into the country, planing to open more than 1,500 stores in China in ten years.

    Convenience store’s brewed coffee stand out in a crowded market

    Coffee brand giants are everywhere, but  coffee sales from convenience store never falls behind, occupying the lower level consumer market. According to the FamilyMart Co., Ltd., there are more than 2,000 stores in the country now selling freshly brewed coffee and the annual revenue in 2018 has exceeded 50 million cups. FamilyMart  revealed that their goal is to sell 100 million cups of coffee in 2019.

    Food plus coffee combo drives sales

    Another profitable coffee sales business people usually neglected is the Western-style fast food restaurant. Since KFC, also known as Kentucky Fried Chicken, upgraded the coffee products in 2015, their coffee sales has grown rapidly. In the first three quarters of 2018, KFC sold more than 63 million cups of coffee at an average rate of 2.5 cups per second.

    “The growth of coffee market among convenience store and western restaurant reflects the characteristics of current Chinese coffee market, a market with multi-level, multi-channel and multi-consumer profile.” China food industry analyst Zhu Danpeng said that this also proves the Chinese coffee market still have a big room to invest and develop.

    The current high profit of the coffee industry leads to competition

    Some industry consulting companies predict that the sales of the Chinese coffee shop will grow at a compound annual growth rate of 15% from 2017 to 2025, and will reach more than 100 billion yuan (RMB) by 2025. The number of coffee shops in China is expected to reach more than 80 thousand in the near future.

    However, the competition between freshly ground coffee market cannot be avoided. Zhu believes that one of the fundamental reasons for tight competition is that the profit of the this particular beverage industry is extremely high.

    Recently, Zhu went to Yunnan for site visit and he communicated with the local farmers. He said that the coffee bean purchase price of the famous coffee brand is about 12-16 yuan/kg, which can be used to brew 10-12 cups of coffee. In other words, the cost of coffee beans is less than 2 yuan (RMB) per cup. “It is obvious that the gross profit of this industry has reached several hundred percent.”

     

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