Sat, Jul 31, 2004 - Page 11 News List

Small coffee chains on the rise

TASTING THE FUTUREAs the younger generation trades its tea cups for coffee mugs, small coffee shop franchises have become highly lucrative

By Tina Yuan  /  Contributing Reporter

Small coffee shops in Taiwan have gained popularity over the past two years, as they offer a cheap cup of coffee for the consumer on the move.

PHOTO: GEORGE TSORNG, TAIPEI TIMES

Coffee may be one of the things many Taiwanese people associate Western culture and lifestyle.

But for Wu Meng-tsung (吳孟聰), a cup of filtered coffee is not just about Western tastes, it is his livelihood.

"People like my coffee," said Wu, owner of a small coffee shop on Fushing South Road in Taipei.

Wu quit his civil engineering job last year after his employer delayed paying him for two months.

After thorough consideration and market research, the 42-year-old Wu decided to become his own boss by embracing the fast-growing coffee franchise business, capitalizing on the trend that increasingly characterizes the younger generation is preference for sipping coffee instead of drinking tea.

A year and a half ago, Wu joined E-Coffee (壹咖啡), an express-style chain where customers can purchase a cup of coffee on the go. His shop was only the chain's fourth franchise.

With an initial investment of NT$800,000 in royalties to the company -- a package deal that included training, equipment, materials and furnishing -- Wu appears confident of his down-to-earth skills in making coffee and hopes to see business boom in a market where many of his rivals enjoy hefty profits.

Indeed, small coffee shop owners like Wu who work six days a week and sell enough coffee can move more than 200 cups a day and rake in roughly NT$360,000 per month after a couple of months in business.

The nation's imports of raw and roasted coffee beans had increased 547 percent to 6,427 tonnes last year from 1996, according to statistics provided by the non-profit Taiwan Coffee Association (台灣咖啡協會), which promotes coffee in this country.

On average, people in Taiwan consumed about 80 cups of coffee per person last year -- compared to 300 cups in Japan and 500 cups in the US and Europe, according to the association.

"The domestic coffee market is far from being saturated," Sam Yen (顏文山), president of E-Coffee, told the Taipei Times in a phone interview earlier this week.

Last year, E-Coffee reported NT$70 million in sales and the 263-outlet chain is targeting NT$90 million in sales this year, Yen added.

What keeps the two-year-old chain as successful as it has been is its straight-forward advertising slogan: "Who says 35 bucks can't afford a nice cup of coffee?"

Although the chain's major appeal is low priced coffee with a delivery service, Yen said a not insignificant number of coffee drinkers prefer a place to go and relax in a comfortable atmosphere.

"For take-out customers, it makes no difference whether the cup of coffee is from Starbucks," confirmed Wu, "but for people who prefer a better atmosphere -- they would go to Starbucks."

But the chain is not totally inferior on this front. E-Coffee has five in Taiwan and two in China.

As the booming success of small coffee chains like E-Coffee arouses more interest in coffee, more choice for the consumer means it may be difficult to develop customer loyalty.

Further, the nation's express store chains are also facing looming competition from larger firms such as the President Chain Store Corp's (統一超商) 7-Eleven chain, as the latter is considering entering the NT$25 filtered coffee market.

"We have been testing the waters for two months selling the freshly-brewed coffee at some of our outlets," said Lillian Lin (林立莉), public relations manager for President.

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