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Greater consumer awareness of premium coffee from the West is causing a shift in consumer demand in Southeast Asia. Instant coffee mixes in retail stores and local coffee in coffee shops remain popular. However, the wider availability of different types of coffee brought in by the expansion of international and local cafés provides consumers more choice in foodservice, emphasising experience, convenience and the brewing process.
Growing sophistication in consumer taste and rising urban disposable income levels across Southeast Asia have led to greater demand in urban cities for premium fresh coffee, which includes single-origin and Arabica coffee. Many independent and chained specialist coffee shops have opened in response. These cafés highlight new brewing processes and the nature of coffee beans whilst tapping into the café-hopping culture of millennials.
On the other hand, the wide array of affordable coffee available in local coffee shops, such as kopitiams in Malaysia and traditional pavement cafés in Vietnam, makes some consumers hesitant to spend on premium coffee. This means that specialist coffee shops in the region need to provide strong enough reasons for regular coffee drinkers not only to trade up but also to change their coffee consumption habits.
As local consumers become increasingly knowledgeable and sophisticated in their taste preferences, coffee chains are focusing on providing the ultimate coffee experience for consumers. San Francisco Coffee in Malaysia, for example, has been refurbished to enhance the ambiance. Nespresso opened a boutique outlet in Malaysia offering consumers the opportunity to brew their own coffee.
Coffee chains also provide a conducive environment for students to study and working professionals to meet over a cup of coffee across the region with their strategic locations at petrol kiosks and shopping malls.
Some cafés are using local coffee beans and blends to provide familiar entry points before consumers move on to try other menu offerings in subsequent visits. In Indonesia, local coffee players like Kopi Tuku serve Indonesian-style coffee known as kopi susu (coffee with milk), which appeals to local tastes and remains affordable to mass consumers. Similarly, local coffee chains Coffee World in Thailand and Coffee House in Vietnam maintain affordability of coffee compared to international chains such as Starbucks. Tanamera Coffee in Indonesia and Bana’s Coffee in the Philippines seek to appeal to local consumer tastes with locally grown single origin bean coffee.
Consumers’ concern over affordability coupled with the wide availability of cheaper coffee alternatives in local coffee shops means specialist coffee shops must adopt an affordable premium positioning to enable a wider group of consumers to trade up.
Instant local coffee mixes dominate coffee consumption in retail. Consumers might be unfamiliar with the various coffee styles and beans imported from the West. Some might even find ordering coffee in specialist coffee shops intimidating. Incorporating local coffee flavours could serve as a starting point for consumers trading up to better quality coffee.