Specialty coffee retail enjoys booming business

Hello! everyone,  I am Soon. I skiped three off line meetings, because I have been busy recently. Sorry about that. I missed our english meeting.   The cold weather, most of people love to drink hot tea or coffee, This artcle will give you  a short pause to drinking a cup of coffee everyday, if you addicted to it.   By the way, I  think I am not able to come to this week meeting also, I will be in my office to work, but if you have trouble with cold weather, all of you are welcomed to come my office for meeting. I have a small heater and space is small, so it will warm you up. if all of you decided to come to my office for our meeting, let me know.   Enjoy the article, (아악, 근데 아티클이 너무 길군요. 미안해요)    Critics question why prices in Korea relatively higher than other markets Baek Woon-mok, a veteran market analyst, says he can't go a day without a cup of coffee. Even if it costs him 5,000 won ($5.30), or as much as a meal, for some specialty coffee - be it Starbucks, Coffee Bean or Caffe Pascucci - it is a worthy investment. "I spend 5,000 won on a cup without a second thought. It's worth it," said Baek, noting that he can afford to indulge. "I could even spend 6,000 won on a cup given the circumstances," he added. Such open reception to specialty coffee despite frequent price increases comes amid a proliferating number of coffee chains. Korean consumers, who have for a long while been used to half the serving of a regular-sized mug, are now readily embracing the larger portions at coffee chains even if it means digging deeper into their pockets. "The economy has developed and many people now have busy lifestyles. Starbucks has responded to this and will continue to make an effort to meet the changes in our society," said Lee Min-kyu, a spokesman for Starbucks Korea's marketing division. But steep prices and frequent increases associated with global coffee chains such as Starbucks have recently sounded alarm bells in the media which question why coffee prices in Korea are relatively higher than other markets. For instance, consumers have to shell out 4,800 won for a Starbucks grande cafe mocha and 6,300 won for a large green tea frappuccino. The prices of some drinks at Starbucks Korea and Coffee Bean have been rising an average 300 won annually since 2005. Still, the coffee boom has led to consumers as young as those in high school to order take-outs, whether it's for a shot of caffeine or the taste. "It may not be that often, but many high school students enjoy take-out coffee," said Kim No-yeon, a 19-year-old student who was studying with her friend at a Pascucci shop in Apgujeong-dong. Since the domestic market opened to global retailers in the late 1990s, Korean consumers have quickly adopted Western consumption trends, particularly since these habits cater to fast-paced work lives and heightened living standards. Just a couple of years ago, a visit to coffee shops like Starbucks for a cafe latte or cappuccino meant going there for the so-called "experience" - to relax and hang out with a cup of coffee still considered more affordable than hotels and conventional cafes. Asked how the U.S. chain sets prices in Asia's third-largest economy, Lee said prices reflect rising costs of dairy, coffee, and other raw materials, as well as higher distribution costs. But Lee also acknowledged that specific market characteristics also determine prices. "Our coffee prices are shaped according to the particular market," he said. He explained that coffee has been regarded as a rare commodity here since it was brought in by the U.S. Army during the Korean War in the 1950s. "Coffee was expensive back then and a luxury commodity. It was a foreign product and represented American culture," said Lee. "This perception is still reflected in the coffee prices of today." For ice-based drinks, he said ice was once considered a rare commodity because freezers and places to store ice were not common in the aftermath of the war. "It's also a cultural thing to view ice as something expensive. So these are the kind of 'cultural' factors that apply when we set our prices," Lee explained. Chang Yoon-jung, head of the operations and marketing team of Coffee Bean Korea Co., however, said their prices strictly reflect import, raw material, labor and space rental costs. Further reflecting the specialty coffee boom here, foreign chains are responding to the unique Korean needs by establishing larger outlets compared to those found in the United States. Lee said this is in response to consumers' desires for a place to relax or hang out, while the demand for take-out coffee, reflecting a globalizing society, is also growing. Lee and Chang say more price increases are possible in the future. They stressed the prices are worth the quality and the experience offered at their stores. The high number of calories found in certain drinks - such as the mocha macchiato or caramel lattes topped with cream - are not hurting sales either, despite the ongoing "well-being" trend. According to Song Seung-jin, a 28-year-old Pascucci server, some people substitute coffee for meals. "About 4,000 won to 5,000 won may be kind of costly and cost as much as a meal, but there are people who can afford it every day, while there are some who buy coffee by skipping meals because of the high calories," Song said. She admitted that coffee is a meal replacement for her sometimes. For more thrifty consumers, less costly homegrown shops or Dunkin Donuts act as an alternative to the "luxury brands" of the coffee retail chains. Yang Tae-young, a 31-year-old university doctorate student, says she is satisfied with a 3,000 won cup of coffee from a small coffee shop or from Dunkin' Donuts. In 2005, experts said Korea's coffee market was in a growth stage with many new players emerging, particularly domestic players. Experts say that the specialty coffee market is fragmented and it is therefore difficult to gauge the precise value of the coffee market. Starbucks is the clear market leader in terms of revenue and number of outlets, they say. Starbucks currently has 177 stores nationwide. The Seattle-based coffee chain's entry to Korea in 1999 marked the advent of the domestic specialty take-out coffee market. Starbucks, an icon of American culture, introduced a whole new concept of coffee consumption. Its arrival inspired the creation of local take-out coffee chains like Sweet Buns and Rosebud. But it also attracted other global brands like The Coffee Bean & Tea Leaf. Other global coffee and pastry chains like Dunkin' Donuts and Krispy Kreme Doughnuts, as well as fast-food chains, such as McDonald's, are also in the competition. But even amid the changing dynamics of the local coffee retail industry, Starbucks and Coffee Bean believe they will not lose their standing. "The coffee market is in a growth stage, and I think smaller shops will be phased out and replaced by larger sized outlets," said Chang of Coffee Bean. Lee of Starbucks said having more competitors is not a threat. "We welcome more competitors because we consider them to be buddies helping us develop and expand the coffee market," he said.