[WHY] Korea's love of Starbucks is about more than just a cup of coffee

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Published: 23 Apr. 2022, 07:00 Updated: 16 May. 2022, 17:08

[WHY] Korea's love of Starbucks is about more than just a cup of coffee

When Starbucks launched here some 20 years ago, there was no indication that it would one day become one of the most common sights in modern Korea.

In fact, its arrival was only part of the Seattle-based coffee franchise’s efforts to expand its footprint into Asia. Korea was third on the list of its continental aspirations, after Japan and China.

Twenty years on, however, Korea has become one of Starbucks’ most important markets. Only the United States and China have more branches, and considering that both countries dwarf Korea in terms of area and population, there is nowhere in the world with denser Starbucks coverage than here.

Korea's appetite for Americanos has never wavered, even as the local coffee shop market has become increasingly crowded. Starbucks Korea's annual revenue exceeded 2 trillion won for the first time last year, posting an on-year growth at 24.2 percent.

The Starbucks success story has now spread beyond the hallowed halls of the American chain. It has revolutionized Korea's cafe culture, making take-out coffees standard and turning coffee shops into somewhere to work, study, socialize and network.

Its success also played a major role in the expansive growth of Korea's coffee market.

Starbucks' first Korean branch in front of Ewha Womans University opened in 1999. [JOONGANG ILBO]

As it did around the world, Starbucks made Americanos the mainstream, introducing Koreans to an aromatic and at times bitter drink radically different from the pre-mixed coffee flavored with sugar and powdered milk that had been most common.

The country's love of coffee has never faded.

Imports of coffee to Korea, including beans and ready-to-drink products, stood at an all-time high of 1 trillion won last year, up 24.2 percent from a year before. Koreans drink an average of 353 cups of coffee every year, dramatically higher than the global average of 130 cups.

Let's not forget that Korea is neither a bean producer nor has a long history of coffee drinking. Koreans first started to drink coffee during the 19th century, a lot later than neighboring Japan in the 17th century.

So what is the secret recipe behind Starbucks' quick success in Korea and its influence on the country's coffee market?

Hakrim Dabang, which has been around since the 1950s, is considered one of the oldest dabangs in Seoul. It is located in Daehak-ro in central Seoul. [JOONGANG ILBO]

Room to relax

Surprisingly, the secret to Starbucks' early success in Korea wasn't the taste of its coffee, but the design of its stores.

Before Starbucks opened its first branch in front of Ewha Womans University in 1999, Koreans were more used to drinking coffee at establishments called dabang.

A Korean word combining "tea" and "room," dabang often served as a place for college students to sit and discuss ideologies, for couples to hang out and for older people to gather and socialize during the 80s and 90s.

Small, intimate places, it was common for staff at dabang to join in the conversation and associate with the customers.

Privacy wasn't exactly an option.

Starbucks, however, offered a completely different experience.

The spacious layout of the coffee shops guaranteed everybody a space of their own, whether catching up with friends or spending the entire day sat with a book and a latte.

"Starbucks guarantees time of your own," said Lee Eun-hee, a professor of consumer science at Inha University.

"Not many people visit Starbucks because they like the franchise's specific flavor of coffee, but because they are in need of space, the vibe from their interior and furnishing and a sense of safety that they will not be interrupted when they are studying or working."

Acknowledging such needs, Starbucks adapts the furnishing of its branches depending on which neighborhood they are located at.

For instance, Starbucks stores that are located in school and office districts have more seats that are suitable for just one or two people because most of their customers have come to study or work.

Stores that are located inside shopping malls or department stores, on the other hand, have more comfy seats such as sofas for those who visit the store to take a rest.

"Evaluating and analyzing the district and the characteristics of the customers comes before Starbucks opens up a new branch," said a spokeswoman for the coffee franchise.

With space being an important selling point for Starbucks, the aesthetics of its branches has also gone under a major upgrade.

Its Hwangudan branch in central Seoul is a good example. The store, in an old neighborhood home to a number of cultural heritage sites, has a roof modeled after a traditional Korean house with an interior decorated with traditional brick patterns.

The exterior of Starbucks' Hwangudan branch in central Seoul [STARBUCKS KOREA]

Selling an image

Another major factor that contributed to Starbucks' success in Korea is its sophisticated and fancy image.

Despite early criticism that its coffee is too expensive, the brand's focus on social value, such as purchasing fair trade beans, quickly persuaded consumers.

Since its launch here, Starbucks Korea has been emphasizing its use of fair trade coffee beans, which are beans that have been produced following certain sustainability and labor standards throughout the supply chain.

"The early 2000s is when Korea's per capita income was about to exceed $20,000 and people started to care about dignity and class," said Lee Gil-sang, professor of education at The Academy of Korean Studies and the author of "History of World Coffee and Korea's Coffee."

"Now that their income had grown to a certain level, people started to care about and desire a sophisticated image from the Western world. Starbucks nailed that specific need with its social contributions image. That is why holding a Starbucks coffee cup became sort of a trend at the time and lead to the growth of take-out coffee culture. Before, drinking or eating while walking was considered very bad behavior in Korea."

Koreans' hunt for a sophisticated image extended to other brands as well.

Homegrown coffee franchise Paul Bassett, which opened its first store inside Shinsegae Department Store's Gangnam branch in 2009, emphasized its high-end and exotic image by offering a Lungo instead of the more widely known Americano.

Despite its higher price than Starbucks' Americano, Paul Bassett's Lungo, an Italian-style black coffee, was well-received among Korean consumers and helped the brand open 100 stores within just eight years.

People line up in front of Blue Bottle's first Korean branch in Seongsu-dong in eastern Seoul on its opening day in 2019. [JOONGANG ILBO]

The popularity of Blue Bottle coffee is another example of Koreans' tendency to focus on the image rather than the drink itself.

The brand, known for its slow-drip pour-over coffee, was the talk of the town even before it opened its first store with its chic and premium brand image, as it was often dubbed the "Apple of coffee."

When it finally opened its first Korean location in 2019, people started lining up outside the cafe from 5 a.m.

Starbucks Korea started using paper straws in 2018 [STARBUCKS KOREA]

The latest example of Starbucks' image success is its association with the environment.

Starbucks started using paper straws from 2018, the first coffee franchise in Korea to do so, and recently pledged to completely do away with disposable cups by 2025.

"Starbucks is selling an ethical image to its customers, especially younger consumers who are very sensitive about the environment, morality and stuff like that," said Kang Yu-jung, dean of the Department of Korean-English Culture Contents at Kangnam University

A place to network

Witnessing Starbucks' success, similar coffee franchises from home and abroad started opening branches in Korea.

The Coffee Bean & Tea Leaf from Los Angeles, Hollys Coffee, Pascucci, A Twosome Place and Ediya Coffee from Korea are a few of the most popular.

According to the Korea Customs Service, there were 83,363 cafes in Korea as of 2021, a sevenfold increase compared to a decade ago. That's nearly double the number of convenience stores located in Korea, at 48,458.

Do these omnipresent cafes really mean that coffee is Korea's favorite drink?

The answer is both yes and no.

Yes, Koreans drink coffee, often in huge quantities, but not necessarily because they love the flavor. Instead, the drink has become one of Korea's most important social lubricants, offering an excuse for people to socialize and chat outside the more rigid confines of the office or the classroom.

“I didn’t start drinking coffee until I was out of college,” said Chung Ju-hee, a 32-year-old Seoulite working for a media outlet.

“When I was an intern at an office in Seoul, all the people I worked with would go out for lunch and there would never be a day when we’d come back in without having stopped by a cafe. It was almost like a ritual.”

Cafes became the go-to place for networking in Korea over the past few years. There is, quite literally, a cafe on every corner, guaranteeing a space to socialize practically anywhere in the country.

But hanging out at these cafes doesn't mean falling back into the old intimate talks that the layout of a dabang forced, instead offering a more casual environment that people can share with colleagues.

Drinking coffee is just a byproduct of that process, not the goal.

Ediya, a homegrown coffee franchise that boasts the highest number of branches in Korea, is one example that takes advantage of that trend.

It has more than 3,000 stores across the country compared to Starbucks' 1,600 and sells relatively cheap coffee.

In metropolitan area, its stores usually house no more than 10 tables, catering to office workers who stop by to mingle for a while and leave soon with take-out coffees in hand.

“There aren’t that many options to substitute cafes in Korea when people need to network,” said Professor Kang.

“There is an unsaid agreement that casual talking should not take place at offices so people go to cafes. Those talks don't tend to take place while dining either because Koreans tend to focus on eating, which is why Koreans finish eating within one hour whereas in Western countries, they eat for two to three hours. Koreans would say 'now that we've finished eating, let's go to a cafe to talk.'"

What's next for the coffee industry?

The coffee business in Korea is expected to continue growing, although not as fast as it has been.

Despite concerns that the market is already highly saturated, coffee products and cafes are continuously evolving, creating new need and demand.

Hyundai Research Institute projects the market to reach 9 trillion won next year compared to 8 trillion won in 2018, with the market being polarized between cheap drinks such as those often found in convenience stores and premium, specialty coffees.

Convenience stores like GS25 and CU have seen sales of their take-out coffees grow at an average of 20 percent since 2019. Their coffee ,which is brewed from well-known automatic coffee machines such as Jura, cost around 2,000 won per cup, half of what it would cost at most cafes.

At the other end of the market stands what's called specialty coffee, which focused on flavor with everything from the choice of beans to the roasting method.

San Francisco-based Blue Bottle proves the case. Its Americano costs 5,200 won, slightly above Starbucks' 4,500 won.

Blue Bottle Korea turned to profit last year for the first time since its launch in 2019. It recorded sales of 20.2 billion won with a net profit of 2 billion won.

The fact that Koreans are cultivating a coffee culture of their own is also a positive sign.

Many consumers have high standards when it comes to coffee and have developed fragmented preferences, leading to the birth of a number of local specialty coffee shops, represented by Terarosa Coffee headquartered in Gangneung, Gangwon.

Terarosa Coffee, which started its business in 2002, won the hearts of local coffee aficionados with its delicate flavor in strictly brewed specialty coffees, and now runs 19 branches across the country.

With its success, a coffee town was created in the coastal region, where budding baristas and coffee fans flock to make and taste coffee that suits their tastes.

"The coffee preferences of Koreans have gone up so much," said Professor Lee. "Coffees and cafes are no longer a culture unconditionally taken in from Western countries, but have gone through an evolutionary change and settled as Korea's own culture."

"Concerns over Korea's coffee industry being saturated have been around for about 10 years, but it continued to grow. I think the future will be the same."

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]