South Korea: Once viewed as old-fashioned, coffee delivery gains traction amid contactless trend

Cups of coffee. (Yonhap)

SEOUL: Coffee delivery services are not an unfamiliar concept in South Korea. Serving persons at tea houses, or “dabang” in Korean, used to deliver cups of coffee filled with sugar and cream on foot.

Big-name coffee chains such as Starbucks and small independent cafes replaced such tea houses by offering curbside services and takeaway. But their services, driven by the contactless trend amid the coronavirus pandemic, have begun to change: They are expanding coffee delivery services to bolster sales amid stiff competition as consumers adapt to a new reality.

Indeed, coffee is the most beloved beverage for South Koreans.

The country’s coffee market was estimated at 7 trillion won (US$5.79 billion) in 2018 and is expected to grow to some 8.6 trillion won in 2023, according to Hyundai Research Institute.

The country’s yearly coffee consumption per adult reached 353 cups in 2018, compared with the average global consumption of 132 cups, according to a 2019 report by KB Financial Group’s research unit.

Combined revenues logged by South Korean coffee shops amounted to $4.3 billion in 2018, marking the third-largest tally globally. But their operating profits per store are on the decline amid cutthroat competition, it said.

The number of coffee franchises and neighborhood cafes has mushroomed to a point where it is not difficult to spot coffee shops here on almost every street corner. Also, “home cafe” clans brew coffee at home with coffee machines, and even convenient stores sell quality coffee at relatively affordable prices.

Against this backdrop, coffee chains and neighborhood cafes are strengthening coffee delivery services on the popularity of delivery apps amid a non-contact consumption trend.

According to Woowa Brothers, operator of the country’s most used delivery app Baedal Minjok, or Baemin, the number of delivery orders for cafe beverages and desserts rose 35 percent in May from January,

“Generally, demand for delivery services has risen. But orders for coffee and desserts have recently grown at a faster pace than those placed for food like chicken,” an official at Woowa Brothers said.

Jung Hye-soo, a 40-year-old housewife, has used a delivery app to receive coffee delivery more often since the country reported its first coronavirus outbreak in late January.

She often searches for information about coffee shops that provide delivery services for coffee and sandwiches at online community sites.

“The virus outbreak made me refrain from going outside home. With delivery services, I can enjoy coffee with various flavors with ease,” Jung said.

A growing number of coffee franchise operators have been quick to accommodate customers who want to drink coffee at home or the office.

Ediya Coffee Co., a local coffee franchise operator, said delivery services were available at some 1,500 of its shops across the country as of May, compared with around 1,200 in January. It began delivery services in 2018.

Ediya, the largest coffee chain in the country in terms of store numbers, said it saw orders for coffee delivery nearly double in May compared with January.

“To help boost sales amid the pandemic, we plan to strengthen delivery services by holding discount events via delivery apps,” an official at Ediya Coffee said.

South Korean food and beverage giant SPC Group said sales from its delivery services have grown by a monthly average of some 15 percent at its coffee chain Caffe Pascucci since February.

Nearly 80 percent of around 500 Caffe Pascucci outlets offer coffee delivery services.

A Twosome Place, another coffee chain brand, teamed up with delivery app Yogiyo in January to offer delivery services for its coffee and desserts. The Coffee Bean & Tea Leaf has recently kicked off delivery services at around 40 outlets.

Competition to grab customers via delivery services is expected to further heat up, but still some customers prefer to visit cafes to have a moment of rest.

“When I had to work at home amid the pandemic, I used coffee delivery services several times. After a remote working scheme ended in May, I don’t feel inclined to use the service any longer,” said a 35-year-old office worker surnamed Lee.

YONHAP