Asia’s Coffee Shop Revolution
Why are Western-style coffee shops causing a stir across Asia?
June 5, 2006
I was tired. I was thirsty. And more than anything, I was jet lagged. I was in Beijing's Forbidden City — the very cradle of Chinese culture — the home to generations of China's emperors, their concubines and their eunuchs.
And then I saw it, next to the Jing Yun Men, the Gate of the Great Fortune, right in the heart of the Forbidden City. It was discreet. It was small. But it was there. It was Starbucks.
"Many foreigners are not happy when they see this here," a young Chinese said to me. But I was too jet lagged to be purist. I had a Café Americano with three shots and imagined the Son of Heaven sitting in the corner doing the same.
Hadn't Pu Yi, the last emperor, caused howls of outrage among his eunuchs when he had a telephone installed in the Forbidden City in the 1920s? Perhaps the problem is not so much that there is a coffee shop in the heart of the Forbidden City, but that it is American.
Revolutions used to be planned in the coffee shops of Europe. But in Asia, it is the coffee shops themselves that are the revolution. Tea is the traditional beverage of Northeast Asia and India. And yet, it is coffee shops that have marched into Asia creating huge demand where before there were none.
Coffee has long been consumed in Southeast Asia. Kopi tubruk remains popular among ordinary Indonesians. It is gritty, served hot in a glass and with several spoonfuls of sugar. The grains are not filtered off but left in the glass where they sink to the bottom.
Traditionally, coffee beans in Malaysia — and especially Penang — were not roasted and blended, but fried with butter and sugar.
The beans were then powdered and put into a muslin strainer. This was then placed over an enamel mug and hot water was passed through it. The resulting beverage was then sweetened with sugar and condensed milk and served hot or iced.
The new-style coffee shops are not the open-air kopi tiam of old with marble-top tables and Brentwood chairs, but Western-style coffee shops that cater to young, affluent Asians. American chains are making the greatest inroads, but they're not having it all their own way. Many locally owned chains also have gone into business.
Coffee, which is the world's second most widely traded commodity after oil, is also grown increasingly in Asia. It is the main commercial crop of East Timor. It's grown in Indonesia and Thailand, too.
And Vietnam has planted millions of hectares of coffee trees in only a short time, such that its annual production of robusta beans rose from 85,300 tons in 1990 to 965,200 in 2000. It is now the world's second largest producer.
What is the most popular way to drink coffee in Asia? In Southeast Asia, at least, it is not a Café Americano, a latte or a short macchiato, but ice-blended coffee — mixtures of coffee, ice, chocolate or vanilla and milk blended together and then topped with whipped cream.
Between half and three-quarters of all beverages sold in stores like Coffee Bean and Tea Leaf and San Francisco Coffee in Malaysia and Singapore are not hot coffee, but these ice-blended drinks.
The hot, humid climates of Southeast Asia are not conducive for drinking hot coffee. But another factor that hampers coffee consumption is ignorance on the part of local consumers about the various forms that a cup of coffee can take, although this is hardly unique to Asia.
Many customers do not understand the difference between a macchiato, an espresso or an Americano. There have been occasions in Mumbai and Kuala Lumpur when I have ordered an espresso only to watch the curious looks on my fellow customers' faces as I head to a table with the tiny cup that holds it.
In any event, the ice-blended drinks have higher profit margins. Whereas a cup of coffee at a traditional food stall in, say, Malaysia might cost the equivalent of $0.25, an ice-blended coffee at any of the new-wave coffee shops sets customers back the equivalent of $2.00-4.00.
But who is drinking all this coffee? University students and young professionals are the main customers. Suddenly, lingering over coffee has become fashionable.
Instead of hanging out in shopping centers, for the price of a cup of coffee young people can now hang out in any of the modern coffee shops with bright modern decors, wicker chairs and ceiling fans.
Many of the coffee shops are located at well-chosen vantage points — perfect from which to watch the passing people or be watched.
Many also feature outdoor areas — which is revolutionary in itself — given the propensity in Asia for anything deemed modern to be enclosed and chilled with heavy air conditioning.
Ironically, the new breed of coffee shops hark back to the old days of open-sided Hainanese and Fuzhou coffee shops that sold tea, noodles, char siew pow, tow sar pow, and maybe cups of Nescafé spooned from tins and laden with condensed milk, all served by the owner dressed in white shorts, a blue singlet and worn flip flops.
The irony is that Asia's young and trendy think that they are doing something new. The reality is that they are reverting to the habits of their grandparents. It's only the pricing that's different.
And that is what the real revolution has been, not to get people in Asia into coffee shops, but to get them to pay so much for the privilege and to make them think that they're getting value for money.
In China, a typical cup of coffee at Starbucks costs around 20 yuan (about $2.40), when the average monthly income is little more than 1,000 yuan.
So patrons of Starbucks and its equivalents in China tend to treat a visit not as a quick pit stop to have a burst of caffeine and go, or as a place to get coffee to be taken away, but as a place to sit and spend several hours.
This much can be seen when visiting a Starbucks in China — locals come and make a single cup of coffee last all day if necessary.
And so Starbucks outlets in China typically have plenty of seating. Many are in pleasant locations and have windows with views. In the United States, Starbucks is selling a drug — a quick caffeine hit. But in Asia, it knows that it is selling a lifestyle.
Care is put into designing the décor, packaging, flavors and even background music. While $3 for an iced beverage is expensive, it is very much cheaper than purchasing a restaurant meal. And while the venues are up-market, the total spent need not be.
Religion is another factor for the success of new style coffee shops in Asia. Alcohol consumption is forbidden in Islam. And many Muslims do not feel comfortable even being in premises that serve alcohol — local laws prohibit them from entering such places.
The new-style coffee shops present a modern alternative where Muslims can mix and socialize freely with non-Muslims. This is clearest in Malaysia, where Malays and Chinese can be seen readily at Starbucks or Coffee Bean outlets. They may not be at the same tables, but they are at least able to enjoy the same venues.
Adapted from the book “Inside Knowledge: Streetwise in Asia ” by Michael Backman, copyright © 2005. Reprinted by arrangement with Palgrave Macmillan.
Author, analyst and columnist Michael Backman is an author, analyst and columnist who specializes in Asian culture and corporate practices. His book, “Asian Eclipse: Exposing the Dark Side of Business in Asia” was named by The Economist as one of the 16 finest, general non-fiction books of 1999. Mr. Backman is also the co-author of […]