The East Asia branded coffee shop market has proved resilient in the face of severe COVID-19 disruption, with 13 out of 17 markets achieving outlet growth over the past 12 months.
Its three largest markets, South Korea, China, and Japan achieved outlet growth of 8.3, 2.9, and 2.3 per cent respectively, according to Project Café East Asia 2021.
Boasting 482 branded cafés per million inhabitants, South Korea’s 24,905-outlet market is East Asia’s largest and most developed. While industry leaders surveyed in Project Café East Asia 2021 reported a 20 to 30 per cent sales decline due to the pandemic, South Korea’s densely populated and domestic chain-led market achieved impressive outlet growth over the last year.
Fifty-nine per cent of Chinese operators reported positive sales growth over the last 12 months. A further 67 per cent of industry leaders surveyed believe current trading conditions are positive.
Cambodia is East Asia’s small, but fastest growing branded coffee shop market, increasing from 259 outlets to 331 in the last year, representing 27.8 per cent growth. Brunei saw its market contract the most (-5 per cent), while Singapore and Taiwan contracted by -3.3 and -2.2 per cent respectively.
Coffee and café culture is gaining significant traction China’s relatively undeveloped branded café market, now home to 21,464 outlets. Highlighting the strong opportunities for international coffee chains in the world’s most populous country, 54 per cent of industry leaders surveyed believe China will become a predominantly coffee-drinking nation over the next five years.
With formidable global brands, such as Starbucks, McCafé, and Costa Coffee, as well as a fast-growing domestic segment, investing heavily in Chinese expansion, competition looks set to become fierce in 2021.
Despite financial controversy in 2020, domestic chain Luckin Coffee’s e-commerce strategy continues to be embraced by major competitors and consumers alike, with the pandemic accelerating digital integration in coffee shops. Eighty-six per cent of Chinese consumers surveyed indicate they have previously ordered takeaway coffee for delivery, with more than half doing so two to three times a week.
In Japan’s traditionally cash-centric society, the pandemic has impelled many operators to rapidly embrace digital transactions, online ordering, and e-commerce platforms, with industry leaders surveyed forecasting deep structural changes in East Asia’s third-largest branded café market as a result.
Project Café East Asia 2021 forecasts the East Asian branded coffee shop segment will exceed 79,700 outlets over the next 12 months, representing 7 per cent growth. The market is anticipated to reach 103,500 outlets by November 2025, displaying a five-year compound annual growth rate of 6.8 per cent, making it by far the world’s largest branded coffee shop market.