Howard Schultz said he knew Starbucks would be a hit in Japan the day he opened his first store here in 1996.
When Schultz, the company's chairman, arrived in the fashionable Ginza district at 6:15 on that humid August morning, 100 people were lined up for the ribbon-cutting, scheduled for 6:30am.
At the front of the line was a man in his 20s who looked as if he had slept outside the shop the night before. When the doors opened, he rushed in to become customer No. 1 in Japan. Although he otherwise spoke no English, he blurted: "Double short latte!"
Since then, Starbucks, based in Seattle, has become a household name in Japan (it is pronounced Stah-buks-zu) and has redefined the way Japanese drink and think about coffee.
Like Starbucks shops in the US, those of Starbucks Coffee Japan Ltd feature comfortable sofas, American hip-hop and reggae and large servings of a gourmet brew.
These are relatively new concepts in Japan, where cafe patrons had been accustomed to sitting in dimly lit shops and sipping from thimble-sized cups. But the stores were an instant hit.
Unlike most Japanese kisaten, or coffee shops, Starbucks does not allow smoking.
The policy has attracted young women, who do not smoke nearly as much as Japanese men. Given the choice between smoking or chatting up potential girlfriends, many young men have become regulars at Starbucks, too.
Starbucks Coffee Japan has proved so popular that it opened its 300th store this month and is planning to add 180 in the next three years.
It turned its first profit last year, earning ?1.4 billion, or about US$$11.7 million. Its sales of ?29 billion, or US$242 million, were more than double those of the previous year.
Investors have noticed, too. The stock of Starbucks Coffee Japan Ltd made its debut on the NASDAQ Japan exchange on Oct. 10, two years ahead of the original plan. The shares rose 9.4 percent on the first day of trading, to ?70,000 -- an achievement, given the beating that Japanese stocks have taken in recent months. The stock now trades at ?73,000.
Outdid expectations
"Any way you measure it, we've exceeded our wildest expectations," said Schultz, who was in Tokyo for the initial public offering.The success of Starbucks in Tokyo -- sales volume per store in Japan is twice as high as in the US -- is all the more remarkable because this nation of tea drinkers has been mired in recession for most of the past decade. But the Japanese, always eager for the next trend, have taken to gourmet coffee as ravenously as they have embraced McDonald's hamburgers and fine French wine.
Among Japanese in the 18-to-59 age group, more than 80 percent like coffee, according to the All Japan Coffee Association, a trade group of importers and retailers.
Other companies, foreign and domestic, are trying to succeed with coffee here, too. Two other brands from the West Coast of the US, Tully's Coffee and Seattle's Best, run dozens of shops in Tokyo and enjoy strong sales. Local franchise chains like Doutor Coffee (pronounced Doe-tour), which operates more than 1,000 shops across Japan with smaller, less expensive servings, are recording record profits.
The domestic coffee market is now worth US$10 billion in annual sales, and the typical Japanese coffee drinker downs 11 cups a week, about a cup more than six years ago.
Japan is now the third-largest importer of coffee beans behind the US and Germany. Total volume has risen 28 percent in the last decade.
On a per-capita basis, though, Japanese consume about 3kg of coffee beans annually, on average, compared with 4.24kg in the US and 5.58kg in the EU. That disparity encourages Japanese coffee purveyors.
"There's lots of room for the market to grow," said Masao Yamashita, executive director of the All Japan Coffee Association.
Although coffee is a deeper part of the social fabric in the West, Japan is no stranger to the coffee bean.
Dutch traders first brought coffee to Japan in the 17th century, but the shogun prohibited them from traveling beyond Nagasaki, their southern port of entry, so coffee was tasted by relatively few Japanese.
Coffee made deeper inroads in 1853 with the arrival of US ships led by Commodore Matthew C. Perry.
Soon thereafter, breaking three centuries of isolation, Japanese started to travel overseas. They brought back elements of the Parisian, Viennese and German coffee culture.
The first coffee shop opened in 1888 in Tokyo's Ueno district, and drinking the brew became associated with the leisure class who had time and money.
Coffee's image changed again when US GIs arrived after World War II, instant powder in tow. "American blend" became synonymous with weak, bland coffee. But the newly liberated Japanese, living in tiny homes and working in cramped offices, flocked to coffee shops.
Quirky tastes
Many of those shops played jazz or classical music and reflected the quirky individual tastes of the owners, who often charged exorbitant prices for the privilege of sitting in a cool, quiet room away from family or a boss.
Despite prolonged deflation, the price of an average cup of coffee in Japan has risen to ?419, about US$3.50, from ?370 a decade ago.
Coffee really went national in 1961 when the government removed import duties on the instant variety. The number of coffee shops hit a peak of 154,090 in 1981, when the industry employed almost 600,000 people. But like a caffeine high, the fervor wore off, and tastes changed.
During Japan's bubble economy in the 1980s, speed and convenience became buzzwords. Doutor started offering coffee at about US$1, as well as a limited menu that included hot dogs, and only a few seats, mimicking European cafes, where patrons often stand.
Doutor ditched the counter space when people refused to stand while eating, but the overall concept stuck.
Another chain, Pronto, introduced a "coffee bar." By day, the shop operates like a cafe, but at 5pm, the staff changes uniforms and slides the wall behind the counter to one side to reveal racks of liquor and wine. The success of these franchise shops has contributed to the slow decline of the neighborhood kisaten. There are now just 94,000 coffee shops in Japan, down 40 percent in the last two decades, even accounting for the rapid rise of the big chains. But Doutor and similar chains alienated many Japanese who were turned off by the cigarette smoke and the packs of snoozing commuters.
Starbucks, almost by accident, provided an alternative. Record numbers of Japanese traveled to the US in the 1990s, and Seattle was one of their most popular destinations. By the time Starbucks opened here, many Japanese had already visited its US stores.
Starbucks has still not advertised in Japan, but it has a loyal clientele. Nikkei Restaurants, a monthly magazine that tracks eating and drinking establishments, has rated Starbucks the No. 1 franchise chain.
"The stores have cushions and that cozy feel I get at home," said Yuki Ibuchi, 28, a Tokyo office worker who has a collection of 20 Starbucks mugs with logos of US cities she has visited.
Not only are Japanese drinking more coffee, they are anxious to serve it. Just as the number of sommeliers surged after the wine boom in the mid-1990s, many Japanese are now studying to become barristers, or those trained to make espresso.
At Maccinesti, a cafe that pipes in-Seattle radio stations over the Internet, Miho Kanai, 24, makes lattes with steamed milk on top, shaped like a swirling leaf.
Kanai, who studied with David Schomer, the Seattle-based author of Espresso Coffee: Professional Techniques, eventually discards two cups of espresso before getting the flavor and color she wants.
"Only once have I made a perfect cup of coffee," she said.
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