cafés

What’s Up With All the Cafés in South Korea?

Business

Within a minute’s walk of my office in Seoul’s Daehangno district are no less than ten cafés. And this is nothing out of the ordinary in Seoul, a city with some 17,000 coffee shops to caffeinate its 10 million citizens.  

So why is this country obsessed with brown beans? And can there possibly be any more room for growth in such a market?

In 2017, South Korea’s food and agriculture ministry announced that the country’s citizens had consumed an average of 377 cups of coffee the previous year, valuing the coffee market at 6.4 trillion won. Café sales accounted for more than two thirds of this figure. 

In the same year, South Korea’s biggest two coffee franchises were Starbucks Corp and Ediya Co. with market shares of 26.4 and 17.1 percent, respectively, according to market research firm Euromonitor.

South Korea’s huge café market may be sustained by more than pure love of coffee. Llan Alon, author of “Global Franchising Operations Management,” describes cafés in South Korea as a “third place.”

“Your home is where your family is; work is where you earn a living with your colleagues; the coffee shop is the third place — an escape from the pressures of the other two,” he wrote.

cafés
Numerous cafés near my office (Source: Daum Map)

 

With cafés on almost every street corner, some are skeptical about the potential for continued growth. Others disagree.

“The coffee market is not saturated. Cafés are,” said Lee Han-bin, owner of Botongeui, a small but popular café next to my office. Lee claims, there is room for growth through premiumization — his customers are now interested in understanding the coffee they drink, in terms of variety, processing method, or origin.

According to Euromonitor, franchise coffee shops are now targeting consumers in their 30s and 40s by jumping on the coffee premiumization bandwagon. Starbucks opened the largest outlet in South Korea this year in Seoul’s Jongro district, offering a wide selection of its premium Reserve coffees. Rivals Angel-in-Us and Tom N Toms both operate premium outlets, too.

Driven by consumers in search of a good home brew, capsule coffee sales soared by over 47 percent between 2014 to 2016, according to the South Korean government.

“Instant coffee mix used to be popular, but now people want specialty coffees,” said Lee, as he handed me a freshly brewed cup of Guatemala Finca Santa Sofia, with aromas of black cherry and orange.

 

Cover image: Lee Han-bin busy brewing coffee at his joint in Daehangno, Seoul (Ho Kyeong Jang/Korea Exposé)

Juwon is a journalist at Korea Exposé covering all things business. She’s previously worked as a TV producer in Channel News Asia in Singapore and has interned for Bloomberg, AP and Google. Juwon is a proud owner of her dog Noah and a graduate of Journalism and Media Studies Centre at the University of Hong Kong.