Wed, Oct 03, 2018 page11

• Fresh coffee becomes a cash cow for convenience stores

  • Staff writer, with CNA
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  In the land of tea, a cup of freshly brewed coffee has emerged as a major driver of sales and profits for the nation’s convenience stores, leading them to hone their strategies to take full advantage of consumers’ growing coffee demand.

  Sales of fresh coffee last year rose 17 percent to NT$16 billion (US$521.72 million) at Taiwan’s five convenience store chains — President Chain Store Corp (統一超商), which operates the 7-Eleven franchise; Taiwan FamilyMart Co (全家便利商店); Hi-Life International Co (萊爾富); OK Mart Co (來來超商); and TSC Million (台糖蜜鄰), which is operated by Taiwan Sugar Corp (台糖) — the Fair Trade Commission’s annual survey on chain store sales last year showed.

  The sales accounted for 40 percent of the NT$40 billion in beverages that the chains sold, the data showed.

  

  A woman holds a cup of Guatemala Huehuetenango coffee at a FamilyMart convenience store in Taipei in an undated photograph.

  Photo courtesy of FamilyMart

  Coffee ranked fifth in terms of sales by product at the stores, after tobacco products, other drinks, sandwiches and hot meals, but it had a gross margin of 50 percent, the highest of any product category sold in the stores, the survey showed.

  That might be why the chains put such a high priority on making their coffee offerings appealing through high-quality requirements, branding and other marketing strategies.

  City Cafe at 7-Eleven stores last year sold about 300 million cups of coffee and sales continue to grow thanks to a focus on getting each cup right, President Chain Store public relations manager Lillian Lin (林立莉) said.

  “We insist on high standards in eight areas” — the water, machines, roasting process and coffee beans used, the people making it, the coffee’s message and visual aesthetic, and the pleasure derived from drinking coffee — that ensure that consumers will enjoy a good, high-quality cup of coffee every time in a fashionable atmosphere, Lin said.

  However, the brew’s success was not always a given at 7-Eleven.

  President Chain Store made inroads into Taiwan’s coffee market with drip coffee in 1986 and the Street Coffee brand in 2001, but neither gained popularity, as the coffee craze had not yet taken off in a nation still in the habit of drinking tea.

  It was not until the company launched the City Cafe brand in 2004 that its coffee sales started making a difference.

  Taiwan FamilyMart joined the club in 2009 with its Let’s Cafe brand, which generated more than NT$3 billion in revenue last year.

  FamilyMart’s coffee sales have shown steady growth thanks to the company’s membership program and the refining of its brews, and it aims this year to bring in NT$3.5 billion in coffee revenue, fresh foods department head Huang Cheng-tien (黃正田) said.

  As coffee drinkers are generally loyal to one vendor and have a constant demand for the drink, FamilyMart said it decided last year to launch a line of coffees, each made from a specific farm’s beans to give consumers a taste for where the coffee is grown.

  In just six months, it has sold NT$150 million of the “single origin, single bean” brewed coffee at its chain stores across Taiwan, Huang said.

  Hi-Life has adopted a strategy of promoting hot coffee drinks flavored with ginseng in colder months and OK Mart has a super float iced coffee.

  By the end of last year, there were 10,662 convenience stores in Taiwan, or one for every 2,211 people.

  The density is thought to be the second-highest worldwide, trailing only South Korea, which in 2016 had one convenience store for every 1,452 people, according to data compiled by the Fair Trade Commission.
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