Coffee Shops in Asia Pacific

March 2023

From rising disposable income levels and increasing taste sophistication, especially among young consumers, to the rapid expansion of local chained specialist coffee shops, Asia Pacific has seen a dynamic coffee shop environment, By analysing the landscape of both local and international chained specialist coffee shops across various markets in Asia Pacific, this report serves to evaluate their success, as well as outline strategies for thriving in the long term.

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Key Findings

Rising disposable incomes and a young consumer base fuel demand for coffee in foodservice

Growing sophistication in tastes and rising urban disposable incomes across Asia Pacific, especially in China and Vietnam, have seen greater demand in cities for premium fresh coffee, especially among young consumers seeking to socialise in cafés. Consumers in cities are increasingly willing and able to pay more for single-origin and premium Arabica coffee.

Expansion of local specialist coffee shops poses competition to international chained specialist coffee shops

While international chained specialist coffee shops, like Starbucks are popular in Asia Pacific, they now face stiff competition from newly opened local chained specialist coffee shops, which are typically located in places with high footfall, and offer lower prices for fresh coffee.

Technology being leveraged by coffee specialist shops

Both international and local specialist coffee shops, such as Starbucks, Luckin Coffee and Kopi Kenangan, have developed their own mobile apps. This not only saves time, as consumers can use the app to make purchases, but it enables coffee shops to provide coffee beyond the coffee shop space, with delivery and takeaway services supported by attractive discounts and promotions.

Local chained specialist coffee shops focus on grab-and-go model

Unlike international chained specialist coffee shops, which are focusing on premiumisation and the café experience, local chained specialist coffee shops tend to prioritise grab-and-go services located in places with high footfall. Because of the small outlet space, this business model caters to large volumes of consumers who order for takeaway, as well as reducing operational and rental costs.

 

Scope
Key findings
Coffee consumption in foodservice in Asia Pacific dominated by Japan and South Korea
The “wave” model in Asia Pacific
Multiple coffee waves co-exist in foodservice across Asia Pacific
Affordable alternatives pose challenges for international chained specialist coffee shops
Rising disposable income levels and young consumer base fuel demand for coffee
Innovations from local chained specialist coffee shops excite and appeal to local consumers
Inflation has dampened consumer sentiment, leading to demand for cheaper coffee
To what extent do milk tea shops compete with coffee shops?
Specialist coffee shops in Asia Pacific expanded rapidly between 2017 and 2022
Starbucks remains the leading player amidst stiff competition from local coffee houses
Rise of digitalisation serves to fuel growth beyond coffee shops
Mobile apps developed by local chained specialist coffee shops seek to attract consumers
Key characteristics of emerging local coffee chains to thrive in the market
Indonesia’s Kopi Kenangan expands rapidly
China’s Luckin Coffee invest in technology to strengthen sales
Vietnam’s Phuc Long focus on smaller store concept for its success
South Korea’s Mega MGC Coffee appeal through price affordability
Strategies adopted by international chained specialist coffee shops vary from local chains
Starbucks in Asia constantly innovates to maintain its leadership in specialist coffee shops
Other international coffee chains in Asia expand touchpoints beyond coffee shop
Sustainability strategies adopted by specialist coffee and tea shops
Future of coffee shops in Asia Pacific – led by international or local coffee chains?
Local chained specialist coffee shops: New business models evolution
International chained specialist coffee shops: New business models evolution
Key findings

Hot Drinks

This is the aggregation of Coffee, Tea, and Other Hot Drinks.

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