April 26, 2024

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[THE INVESTOR] Coffee mix brands -- referred to as mix coffee or stick coffee in South Korea -- are seeing a sharp downturn in sales as instant coffee variants closer to brewed caffeine drinks are chipping away at the customers base, according to industry data released on April 5. 

Coffee mix has been a favorite among South Koreans for over four decades -- since being introduced in 1976 -- and boasted a market size of 1.24 trillion won (US$1.10 billion) in 2012. Since then, however, it has been sliding, and the latest data put it at 910.7 billion won in 2016. 

Instant brewed coffee brands, on the other hand, grew to 162.7 billion won, up 18.4 percent from a year ago. Closer to freshly brewed coffee, the coffee type can cost up to 1.6 times more than the sweeter mix of powder cream, sugar and instant coffee in small sachets. 

Priced at about 200 won per packet, though, it is much cheaper than a cup of Java coffee at a café. 

“As the café culture is becoming part of our everyday lives, more consumers want to enjoy Americano, the most popular among South Koreans, at home as well,” according to an industry source on the growing shift away from coffee mix. 

Industry watchers forecast that as the baby boom generation -- those born after the Korean War and major consumers of coffee mix -- ages and the taste for coffee becomes more expensive, demand for coffee mix will continue to deteriorate. Instant brewed coffee, on the other hand, will grow at about 25 percent next year topping 20 billion won. 

Although many industry experts are concerned that the coffee industry is oversaturated, the revenue of major coffee franchises has increased, with Starbucks Coffee Korea in the lead. Café Bene, a nine-year old local chain, is the only exception, having reported losses. 

By Hwang You-mee (glamazon@heraldcorp.com)