Japan's coffee market is buzzing with customers

Japan's coffee market is buzzing with customers
The first Starbucks outlet in Tottori Prefecture is crowded with customers on its opening day on May 23.

With the opening of its first outlet in Tottori Prefecture in May, the Starbucks coffee chain now has stores in all 47 prefectures in Japan.

Specialized coffee shops have been branching out in the Japanese market, while coffee from machines placed near convenience store cash registers has been enjoying great popularity.

There is also a new movement called "the third wave", which refers to the trend of pursuing high-quality coffee. The hot coffee market is unlikely to cool for a while.

1,000 line up

The first Starbucks outlet in Tottori Prefecture opened near JR Tottori Station at 6:55 a.m. on May 23. Despite the early morning hour, about 1,000 people lined up for the opening, so the actual opening time was moved up five minutes.

The first in line was a 19-year-old local university student who had waited from 1 p.m. the day before.

"With the opening of Starbucks in Tottori, I feel like I'm somewhat closer to an urban area," he said cheerfully.

Since Starbucks opened its first Japanese outlet in Ginza, Tokyo, in 1996, the coffee chain has been enjoying popularity for its upscale atmosphere and menu items such as the cafe latte, which is made with espresso and steamed milk. As of the end of March, Starbucks had 1,096 outlets across the nation.

"Opening Starbucks outlets in all the prefectures is just a stepping stone," said Starbucks Coffee Japan Chief Executive Officer Jun Sekine on May 23. "We're planning to open about 100 outlets a year in the future to become even more widespread."

Comfort in a cup

The amount of coffee consumption in the nation has been increasing, reaching a record high of about 450,000 tons in 2014, according to the All Japan Coffee Association.

So-called Seattle-style coffee shops that originated in the United States, such as Starbucks and Tully's Coffee, landed in Japan in the late 1990s. The emergence of convenience store coffee made by machines installed near cash registers further stimulated demand. Marketing company Fuji Keizai Co. estimates sales of convenience store coffee increased 48 per cent from a year earlier to ¥150 billion (S$1.6 billion) in 2014.

"Due to the great stress caused by work and other factors, an increasing number of people look for comfort in a cup of coffee," a senior official at the association said.

'The 3rd wave'

Despite a love of coffee, old-style coffee shops are disappearing. There were more than 100,000 independently operated coffee shops in 1991, but that number had halved to 54,849 by 2012, according to a survey by the Internal Affairs and Communications Ministry. The Japanese term "saten," which is a shortened form of the word "kissaten" (cafe), is now rarely used.

Pulling against this trend is a movement called "the third wave," which features high-quality, specialty coffee that reminds consumers of coffee from traditional coffee shops.

A representative of this third wave can be seen in the Blue Bottle Coffee chain, which started up in the United States in 2002. In February, the coffee chain opened its first outlet in Japan in the Kiyosumi-Shirakawa district of Tokyo. While prices on its menu range from ¥450 to ¥600, customers constantly come to enjoy its unique style of offering fresh coffee straight from a roasting facility set inside the shop.

Japanese firms counter

Japanese companies refuse to be defeated. A group company called Royal Holdings Co., which operates the Royal Host family restaurant chain and other businesses, opened a Standard Coffee shop in March 2013, which offers coffee that has been carefully extracted from high-quality beans, all while offering a tranquil atmosphere. The company plans to increase the number of Standard Coffee shops to 50 by the end of 2017.

Doutor Coffee Co. opened a new type of coffee shop called Cafe Lexcel in the Marunouchi district of Tokyo in April 2014, attracting many female customers. There, customers can choose how they want their coffee made depending on the type of beans.

"Coffee has a strong connection with people's lifestyles," said Yukio Hirose, professor emeritus at Kanazawa University, who is knowledgeable about coffee culture. "Companies see the need for more careful and detailed services, and are setting up shops to meet those demands."

The third wave

The term refers to coffee carefully made paying special attention to the origin of the coffee beans and how they are roasted. The first wave refers to when coffee became more available to ordinary people thanks to the innovation of production technologies and distribution networks, and the second wave refers to specialised coffee shops that operate chains. The third wave follows them. The term is said to have become widespread in the coffee industry in the United States.

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