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Challenge the Market – Coffee and Japan 2

2019.04.15

The Japanese learned to love the bitter hot drink imported by pioneers from Europe and America. This was a slow process, but it kept growing, supported by enthusiastic coffee lovers, even when the market looked saturated.   

There were three waves in the past, and many see the current market as the fourth wave. 

King of Coffee, Blue Mountain, by Marketing

The Japanese market recognises origin-specific coffee beans as a premium. This started with the rise of the Japanese economy in the 1960s.

One of many international agreements reached at the time was a loan to Jamaica to help develop their public services and commercial sectors, including coffee plantations. 

Jamaica already had an organisation representing the coffee industry, namely the Coffee Industry Board, founded in 1948, which made it easy to work on a new project funded by the international loan.  Japanese trading companies worked together with CIB to develop raw coffee beans from the Blue Mountain area for the export market, predominantly to Japan, to offset the investment.

This was an excellent arrangement for both governments. Coffee plantations and their workers benefited from the steady purchase by Japanese companies, which continues to this day. The dominance of Japanese customers meant that there was no competition. As a means of market differentiation, the trading companies came up with a claim that this bean had a British Royal Warrant, as a result of Jamaica’s history as a British colony.  The price was not reflective of the market but people bought the expensive Blue Mountain bean based on this marketing message. 

Although this wildly false claim was later retracted, the name of Blue Mountain coffee stuck in consumers’ minds as a premium product.  It still commands a higher price even at coffee vending machines. 

Despairing Coffee Experts

The story of Blue Mountain’s early branding is very famous in coffee experts’ circle, and anything with a word “Mountain” can still command a premium price.  It is a fine and well-balanced coffee, suited to the Japanese palate.  However, consumers in the mature market crave more knowledge and superior quality. 

Blue Mountain fatigue in the industry has lead café owners and coffee lovers to make more discriminating and informed choices when it comes to their coffee beans. 

Many consumers are now well educated in their coffee trivia, regarding how to achieve the perfect cup.  There are many websites, YouTube channels and workshops available to learn and experience the difference made by the coffee brewing process. The giant coffee chain, Starbucks, opened its fifth signature Roastery in Tokyo this spring, and is one of the most visited sites in Tokyo. Entry is strictly managed to ensure safety and to guarantee the experience of visitors. An appetite is there to be served for freshly roasted and ground coffee.

Premium Coffee Experience at Home

Panasonic, an electronic appliances manufacturer, launched an experimental subscription scheme targeting this pool of customers, hungry for fresh, perfect coffee. 

Cafés serving real coffee are very busy, as they tend to be small with only a few chairs, and generally are not on the high streets.  The business development team at this traditional company came up with a service, “The Roast”, where a customer purchases a coffee roaster and subscribes to receive the coffee beans monthly.

Specialist importers select raw beans from around the world. The beans come with QR Barcodes that contain the perfect temperature and condition for roasting each type of beans, set by the world champion of coffee roasters.  The user needs to download the app, read the QR barcodes, and press start to enjoy the perfect coffee at home.

The importance of this subscription service is the software that provides knowledge and skill.  The roasting machine was developed in collaboration with a British company, IKAWA, reducing by half the development time of the usual new projects.

Manufacturers realise that the future is not just about making and selling, but providing a lifestyle by adding value through well-engineered hardware and user-friendly software. The subscription model enables the manufacturing giant to stay in touch with consumers.

The take up is slow, but existing customers are happy to persist.  The new subscription option is targeting professionals, using the same hardware but more flexible bean choices and roasting settings for subscribers to customise. It is exceeding the initial expectation on take ups, especially from the independent café owners. 

The home roasting machine and software may not yet be the fourth wave of the coffee market.  But the trials continue, and the real premium raw beans could be the next big wave.

 

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