"Less Than 300 Won Per Drink"... Bought It Every Morning on the Way to Work, Now Mixing It Directly in Water

Cafe Franchise Instant Coffee Expansion Continues
Dongseo Food Responds with Kanu Brand Renewal
"If Coffee Prices Rise Next Year, Home Cafe Competition Will Intensify"

#Office worker A's biggest concern these days is 'how to save even a single penny.' As the cost of living becomes tougher with high inflation and even the stock account turning red, A has started bringing lunch boxes to save on lunch expenses. As part of 'frugal consumption,' A recently switched from buying a cup of coffee on the way to work to instant coffee. Pouring hot water over stick coffee bought from a coffee franchise into a tumbler and taking a sip tastes quite decent. A said, "Since it costs less than 200 won per Americano, I feel like I’m saving money."

As the era of high inflation continues, frugal consumption is heating up the cost-effective home cafe market. Coffee franchises are actively entering the instant coffee market one after another, and existing market leaders are defending sales by renewing their brands. Due to the rise in coffee bean prices caused by 'climateflation' (the phenomenon where food prices rise due to decreased crop production caused by climate change), there is a strong possibility that coffee prices will increase next year, leading to fierce competition in the home cafe market for some time.

'Wallets Closed in a Recession... Coffee Franchises Targeting the Home Cafe Market'

According to the distribution industry on the 29th, coffee franchises are actively targeting the instant coffee market recently. Baekdabang, operated by CEO Baek Jong-won’s The Born Korea, recently launched two new stick coffees: Baekdabang Americano and Baekdabang Coffee Mix Classic.

Based on Baekdabang’s know-how, these products feature coffee flavors with low acidity and a nutty aroma preferred by Koreans. Baekdabang Americano blends beans from three famous coffee-producing regions?Vietnam, Brazil, and Colombia?in an optimal ratio, while Baekdabang Coffee Mix Classic reduces acidity and balances smooth creamer and sweet sugar so that anyone can enjoy it without preference issues.

Ediya Coffee, which entered the instant coffee market two years ago, has re-attracted consumer attention by releasing stick coffee featuring actor Byeon Woo-seok. Among Ediya’s stick coffees, the most popular two types?Special Gold Blend Rich Crema Coffee Mix and Stick Coffee Original Americano?now include photos of Byeon Woo-seok to target fans.

First 'Brand Renewal' Since Kanu’s Launch in 2011... Improved Design and Quality

Dongseo Food, the strongest player in instant coffee, is responding with a brand renewal. Dongseo Food recently carried out 'Kanu Innovation,' improving the product design and quality of Kanu. Launched in 2011, Kanu is a product that allows consumers to enjoy cafe-quality brewed coffee at a reasonable price, achieving cumulative sales of 10 billion cups over 10 years. Through Kanu Innovation, Dongseo Food changed the package design and improved quality.

A Dongseo Food official explained, "We found the Americano taste most preferred by consumers and changed the bean blend ratios to match the characteristics of Kanu 'Dark,' 'Mild,' and 'Light.' We also applied processing methods that bring out the unique properties of each bean well."

The biggest strength of instant coffee is its price. Most cups cost less than 500 won each, making it affordable. For example, Baekdabang Americano sticks are sold in packs of 20 for 4,500 won, which is 225 won per stick. Ediya Coffee’s Original Americano costs 4,700 won for 20 sticks, about 235 won each. This is definitely cheaper compared to a 1,500 won Americano bought at a low-priced cafe.

Consumers with Elevated Coffee Tastes... Cafe Quality is Important

However, as coffee has become popular and consumers’ tastes have become more sophisticated, there is criticism that price competitiveness alone is no longer enough to gain an advantage in the home cafe market. According to a 2022 survey by Embrain Trend Monitor of 1,000 adults aged 19 to 59 nationwide, 61.5% responded that they want to enjoy coffee at home that is as good as coffee shop quality. Additionally, 48.2% said they feel their coffee taste is becoming more refined.

A coffee industry insider said, "No matter how much frugal consumption is trending amid high inflation, people won’t give up their refined taste for premium coffee. To win in the home cafe competition, efforts to maintain cafe quality as well as affordable prices are necessary."

Next year, the recession is expected to continue, and coffee bean prices are forecasted to rise due to climate inflation. This is the result of a sharp decline in production in major coffee-producing countries such as Brazil and Vietnam caused by natural disasters like heatwaves and typhoons. According to the New York Intercontinental Exchange (ICE), on the 10th, the price of Arabica coffee futures was $3.44 per 0.45 kg. Therefore, price increases by coffee franchises next year seem inevitable.

A coffee industry insider predicted, "With coffee bean prices continuing to rise, brands that have restrained price increases by relying on inventory this year will eventually have to raise coffee prices. On the other hand, consumers’ wallets are becoming tighter, so the home cafe market is expected to grow further."