South Korean coffeehouse chains have adopted the strategy of having South Korean pop stars endorse their products. Caffe Bene, which dominates South Korea’s domestic market with a 70% share, has tapped into China’s market with popular television dramas in a way that gives customers an atmosphere that makes them feel they are drinking coffee in a strange and foreign land.
The company’s strategy is aimed at beating Starbucks in the domestic market by integrating celebrity marketing with social interaction and retail store marketing. Even though Starbucks is a global company, the American coffee chain has only managed a 15% share in the South Korean market.
Caffe Bene meanwhile has expanded at a rapid pace in China, opening a new store every eight hours on an average. The store count of the company, which was established in 2008, is expected to touch 1,000 in China this year and 3,000 by 2015.
If it achieves its target, Caffe Bene plans to go public on the Hong Kong exchange. Further it will also set a record for expansion faster than Starbucks, which plans to have 1,500 stores in China by 2015.
In addition to Caffe Bene, other South Korean coffeehouse chains such as Maan Coffee and Zoe Coffee have made inroads into the Chinese market, backed by strong pop-cultural exports from South Korea, according to China Entrepreneur magazine.
Many coffee shops have appeared in several South Korean television dramas.
Around 2010, the logo of Caffe Bene was seen in many television series including Secret Garden, Need Taoist Fairy, Feast of the Gods and High Kick 3.
Additionally, when Caffe Bene expanded their stores overseas, it would replicate the elements seen in television dramas in their high-street stores.
Based on market research conducted by international coffeehouse labels, China’s coffee market is far from saturated. People in China currently spend 70 billion yuan (US$11.3 billion) on coffee every year, which is far removed from a mature market where spending is pegged at between 2 trillion and 3 trillion yuan (US$322-$484 billion) a year.
In 2011, the market’s retail sales posted an annual 19.6% growth in China, compared with the 10% growth seen in markets in Europe and the United States.
In the meantime, Caffe Bene launched a “coffee bank” in collaboration with China Merchants Bank on March 6 this year, whereby customers can enjoy VIP services provided by the bank and the coffee of Caffe Bene.
However, Chinese regulators are yet to give the green light to the service. If the plan is approved, Caffe Bene will open flagship stores in major cities including Beijing, Shanghai, Shenzhen, Chongqing and Wuhan in the following year.
Article source: http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20140409000122&cid=1202
