When money’s tight, the $6 latte is one of the first things to go for South Koreans
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Hundreds of coffee shops have opened across South Korea in the past few years, feeding a thriving coffee culture. But recently, consumer spending has dropped in the country’s current economic slump. That’s not good for coffee.
Economic woes in South Korea have put the brakes on its rapidly rising market for fancy coffee drinks.
South Korea has had one of the largest coffee-consuming populations in Asia — second only to Japan. And that created a coffee culture much like in the US, with independent cafes and even chains, like Starbucks, popping up around the country. But now that money's tight, the $6 latte is one of the first things to go, according to Seoul-based reporter Jason Strother.
Strother points to the influx of coffee franchises that offer much cheaper caffeinated options, like the Korean company Aida ,with its more affordable $3 cup of joe.
"They're one of the most successful franchises in the country right now," he said.
"I think Koreans are realizing that it's just impractical to be spending so much on a cup of coffee."
He said this is a huge turnaround from the direction South Korea was headed in. Average household spending on coffee steadily increased for five years, before falling in the first two quarters of 2013.
"10 years ago, when I first came to Korea, what you got, basically, was coffee-flavored water," Strother said. "It was really within the past several years that this coffee culture took place, and it's been a real status symbol."
The 2014 Seoul Coffee Expo has a similar anaylsis. According to the group, Asian markets typically opt for instant coffee mixes. Only recently have specialty drinks been able to edge their way into the market.
Many companies latched onto the trend for advertising and marketing to young Koreans. Strother said cafes were a hip place for young Koreans to socialize.
"Because many young Koreans live with their families, they try to spend as much time outside the house as possible," he said. "Cafes provided that type of outlet for them."
And while cafes won't disappear, businesses can expect far less revenue than they had over the past few years. For now, there are cheaper ways to get a caffeine fix.
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