Romance of the Three Coffee Kingdom

by chee Leng (on coffee makers)
(Singapore)

Isn't that a fancy name for a coffee article? It is. And in a moment, I am going to show you what I mean by that.

By the way, romance of three kingdom is a classic Chinese story about how China in AD180-250 was finally split into three kingdom after decades of warring by countless warlord.

And this might be the same for coffee as well. Tea is the grand old dame, being around in China since 2000 years ago, and has been drunk in Europe and America for hundreds of years.

Coffee on the other hand, has only been around for hundreds of years and its popularity is really catching on in recent years.

If you look at the demographic of drinkers around the world, majority of them are in North America, Europe still has a mixed of coffee and tea drinkers while Asia is still mainly tea drinker.

But, all that is going to change. Starting from the baby boomers, we all grew up with coffee. Whether it is instant coffee such as Nescafe, or gourmet coffee Starbucks.

The Formation of the Three Coffee Kingdom

The first kingdom in America is already formed and it would be unchallenged for years to come. US would be a coffee nation, they drink more coffee than anyone in the world.

And from there, the three other kingdom in Europe and Asia would formed. Companies such as Starbucks, CBTL and Keurig expand into other region.

In Europe, coffee or espresso is seen as a dessert drink, but all that is going to change. With companies like Nespresso that is actively promoting their machines and ECC and Sara Lee that is aggressively promoting their coffee capsules.

On top of that, you still have your starbucks and Mc donalds promoting their coffee, Europe would be in line with US in the next 2-3 years time.

Asia would take a longer time, especially for China and India, two of the largest tea drinking country in the world.

For the rest of Asia, coffee has invaded every facets of life. From home use instant coffee, to the out of home kopi at coffee shops, the presence of coffee is everywhere.

And every major coffee launch take place in Asia right after US, Starbucks via, Nespresso icube etc.

Tea would not disappear but would be lesser of importance to Asian in the years to come. People would still drink them but like what is used to be.

The major mindset shift for Asians is brewing coffee at home. Currently, coffee machines place a very small part in their daily life.

When it accomplishes a full adoption rate, each Asians would have at least one coffee maker at home (similar to PC and TV). And that is really big business.

Nespresso is already doing a good job at that, and soon Starbucks would follows with its Keurig solution.

Many big coffee companies see this opportunity and are setting up bases, but in my opinion -it is not enough.

The one that is really going all out remains to be Nespresso, and if left unchallenged, would corner most of the market.

What is the potential? Without much marketing, Nespresso reportedly sold 1000 machines within a month in Singapore (a country of less than 5 million people!).

Can you imagine what the sales figure would be like in Shanghai, Beijing, and any of those big cities?

My $0.02

US is saturated, and it is more of a fight for market share and cannibalizing of other company market share.

Europe has growth potential but with high percentage of coffee snobs that only go for espresso, growth might not be as good as Asia.

This is an area where people go for "western" brands" and big names -give them Starbucks, Nespresso or big MNC brands, do some savvy marketing and the market penetration would be amazing.

If you are selling coffee or coffee machine, Asia should be your next port of call, and one that can be developed into a bustling port!