"A group of people in Taiwan are engineering social change through the consumption of coffee," said Liu Wei-gong, an assistant professor of sociology at Taipei City's Soochow University. "Drinking coffee is a reflection of an enhancement in people's way of life," he added.
According to statistics compiled by the Directorate General of Customs under the Ministry of Finance, Taiwan imported 21,195 tons of coffee beans and coffee-related products in 2007, marking an annual average growth rate of 10.24 percent during the past decade. The London-based International Coffee Organization reports that global coffee consumption grew by 2 percent per year between 2000 and 2008.
Given that the average cup of coffee contains about seven grams of beans, Taiwan residents consumed roughly 130 cups per person in 2007. Compared with the global average of 448 cups, industry analysts believe the local coffee market represents a huge business opportunity. The market value is estimated at about NT$13.5 billion (US$409 million) a year, according to the Taiwan Coffee Association.
Green coffee beans represent 58 percent of Taiwan's coffee imports, and the percentage has been rising in recent years. Fresh coffee, therefore, is seen by analysts as the fastest growing segment of the local coffee market.
President Chain Store Corp., which owns the local franchise rights to 7-Eleven--the largest convenience chain store on the island--began selling fresh brews in 1986, but the business failed to sparkle as coffee had yet to become a popular beverage in Taiwan. The country's coffeeholics detested the idea of buying takeout from convenience stores, forcing the company to abandon the project after just a few years.
The local market began to take off after the Seattle-based Starbucks Coffee Co. opened its first retail outlet on the island in 1998. With the aroma of its specialty coffee, the yuppie image associated with its brand, and atmosphere of its coffeehouses, Starbucks successfully created a culture of its own among the country's upper and middle classes.
Eager to carve out a slice of the lucrative coffee business created by Starbucks, many low-priced takeout coffee chains began to enter the market, offering a cup of joe for less than half of those of Starbucks, and enticing pastries at reasonable prices.
7-Eleven reintroduced its fresh coffee in 2004 under the brand City Cafe. As of the end of 2008, the company had sold more than 50 million cups islandwide. More than 2,000 7-Eleven stores around the country are now fitted out with the concept, making the company Taiwan's largest takeout coffee chain.
"The convenience of our stores and the quality of our coffee are the keys to our success," said Irene Chuang, a public relations representative at 7-Eleven. She pointed out that white-collar workers aged 20 to 39 are the main consumers of fresh coffee. Chuang said that through a series of successful marketing campaigns, many people have developed the habit of enjoying a cup of the company's brew on their way to work. "It has become part of many peoples' lives," she added.
Not to be left out of this burgeoning market are Taiwan FamilyMart Co. Ltd. and Kuang Chuan Dairy Co. Ltd., which operate the local convenience store franchises for FamilyMart and Hi-Life, respectively. They have teamed up with King Car Food Industrial Co. Ltd., maker of Mr. Brown Coffee--a top-selling brand of canned coffee on the island--to offer brewed coffee for takeout. McDonald's Restaurants Taiwan Co. Ltd. also launched a series of marketing campaigns in 2008 to promote its cafe concept stores.
Starbucks is well prepared for the challenge from its low-priced rivals. "There is a distinct segmentation in the coffee market," said Amy Luan, a public relations representative at Starbucks, who noted that price is not the most important consideration for coffee lovers on the island.
The company has hardly felt the impact of the recent economic slowdown because "many people see Starbucks as their 'third living space' after home and the office," Luan said. "This is something no other coffeehouse can offer."
Nevertheless, Starbucks will have to keep its eyes open for other up and comers. A recent survey conducted by the Association of Chain and Franchise Promotion Taiwan showed that 25 percent of those planning to start their own businesses consider opening a coffeehouse as their top choice.
It seems there is no shortage of young entrepreneurs setting their sights on grabbing a slice of the local market by helping to quench Taiwan's growing thirst for coffee.
Write to Meg Chang at meg.chang@mail.gio.gov.tw