Day 1 Korea November 2009--Starbucks, Johnny Walker, and Lux

I'm en route to Korea through LAX.

Some thoughts...

1. Koreans returning home usually bring luxury consumables as gifts--Johnny Walker premium, wines, candy, etc. I often see these items stuffed in a Disney retail bag, too.

2. One of my ongoing projects is tracking the success of foreign consumables goods in Korea. Top are Starbucks, Outback, Krispy Kreme.

3. I've labeled the widespread success of Starbucks Coffee, etc as Coffee Wars.

( Check my posting over the past 4 years).

This Korea Times article a great update. Note the upscale appeal. It's critical when entering the Korean market that products are up-market / lux, high quality, and well branded.

Questions? Please email dsoutherton@bridgingculture.com

How Many Coffee Shops Are Enough?

By Jane Han
Staff Reporter

Here's a trivia question: How many coffee shops are there in Seoul's central shopping district of Myeong-dong?

A rough eye count shows at least 15, excluding individually-owned businesses. This means there is one java joint in almost every other block.

From global retailers Starbucks and Coffee Bean to local brands Pascucci and Holly's, colorful coffee shops take up the first floors of the most prestigious buildings not only in the trendy downtown spot, but in the city's top commercial districts.

These companies pay expensive rent to be seated in convenient and eye-catching locations, but are their businesses paying off?

Apparently, they are.

Angel-in-us, a latecomer in the local coffee industry, posted 65 billion won ($53 million) in sales in 2008, up 97 percent from a year earlier. Its competitor Holly's, currently operating 200 stores, recorded 67.1 billion won in sales last year, up almost 50 percent from the previous year.

Foreign players including Starbucks, Coffee Bean and Dunkin' Donuts also brewed up solid results.

The local operation of Seattle-based Starbucks, which runs 310 shops now, saw annual sales of 171 billion won in 2008, a steep rise from yearly revenue of 600 million won in the first year of its operations here.

Coffee Bean Korea rang up sales worth 95 billion won last year, up 30 percent from a year before.

Even though these retailers collectively operate nearly 1,500 shops nationwide, they expect this year to be no different.

``People's lifestyles are changing,'' says Joyce Park, marketing head of Starbucks Korea. ``More and more ordinary consumers are looking for a location where they can casually and comfortably hang out at a reasonable price.''

She said such changing consumer patterns allow the domestic coffee industry more room for growth.

A recent survey of 2,000 working men and women showed that an average person spends almost 20,000 won per month buying coffee, with most of them saying ``coffee is a must in the morning and after lunch.''

``Coffee serves as more than a beverage as people engage and build relationships over the warm cup,'' said an official of Holly's, the biggest homegrown coffee retailer.

Coffee buffs' dedication and the bright market forecast are inviting more new players to compete.

Caffe Bene recently opened its first shop, while CJ Foodville and SPC Group are ramping up the store count of their brands Twosome Place and Pascucci throughout the nation.