South Korea coffee market comes of age

It is for this reason that, despite being decades behind the speedy coffee culture exported from the US, the Association says that the drink is now becoming an ever-popular alternative to the country's traditional hot beverage, tea.

The growth in coffee consumption has also been attributed to South Koreans increasingly travelling overseas, both for business trips and tourism. This has led to a greater exposure to the coffee house culture that originated in the west and to an increasing familiarity with a variety of coffee brands and blends.

In South Korea, around 80 per cent of the coffee consumed is accounted for by vending machines. The Association says that currently there are 480,000 vending machines in South Korea, of which 350,000 serve coffee.

However things are starting to change rapidly as coffee drinkers develop a taste for more sophistacted coffee brands. The first western style coffee houses began to appear in the major cities, such as the capital Seoul, in 1999 and by the end of 2001 over 500 coffee shop outlets had been established. South Koreans already had a culture for socialising in tea houses, so with the growing taste in coffee, the popularity of the coffee houses was almost instantaneous. This, the Association attributes to the small flats that many Korean live in, which makes socialising more appropriate in public areas, tea and coffee houses and restaurants.

Unlike the fast turnover experienced in western coffee houses, the report also highlights that in the South Korean coffee houses, coffee drinkers often dwell some hours over their beverages, taking the time to socialise and relax, much the same as westerners might do in their homes.

The long working days and the time spent socialising, often at the end of work day, dictate that the coffee houses are open from early in the morning to late at night. Coffee houses in cities such as Seoul have sprung up catering for hurried business workers in the early mornings, office lunch hours and then after work socialising. High speed internet connections have also helped to boost numbers, much the same as western style coffee houses.

Despite the fact that coffee house culture hit Seoul relatively late, the market is already showing signs of saturation due to the speed in which the city's 11 million inhabitants have embraced the culture. This has helped to boost per capita consumption of coffee to 60kgs per year for the country's 50 million inhabitants, the report says. The consumption represents 1.3 million bags of coffee, compared to a world consumption rate which stood at 62 million sacks in 2002. Currently the biggest market is the US where approximately 20 million bags are consumed yearly.

The Association says that the main suppliers of coffee to South Korea are Vietnam, with more than a 40 per cent share of the market, with Brazil, Honduras, Columbia and Indonesia all taking between a 9 and 11 per cent share of the market.

Although instant coffee is still continuing to drive the market, the rise of coffee houses is starting to push more and more consumers towards quality coffees. With the phenomenal growth of recent years and the maturation of the market, it is expected to be the premium end of the market where future growth will be concentrated.