While Starbucks and Keurig is doing big business, local boys are busy as well...

by chee Leng (on coffee makers)
(Singapore)

Just take a look at Old Town coffee, the local coffee chains that currently has 182 outlets in Malaysia, Singapore and Indonesia.

It aims to about double its outlets to 300 in the next three years, has just build a manufacturing plant for instant coffee mixes for supermarket.

It is likely that all these would be coming through as it has just got a listing on Malaysia main market, and all these expansion plan would be funded by it.

There are a few take-away from Old Town coffee expansion plan.

1. Coffee business is still hot! 300 outlets and a 52 million manufacturing plant is not a small expansion plan!

2. Instant coffee is still the favor of the day. Starbucks is doing it with Via, and Old Town Coffee has their own formula with 3-in-1 coffee mix

My $0.02

The taste of the local seems to be going back to the traditional coffee with a cafe style. Starting from Yakun, Killiney Cafe in Singapore.

Local flavor cafe that serves kopi has been expanding. There are more than 4 different chains in Singapore alone each boast of more than 10 outlets each.

And of course, Old Town coffee is one of them that is aggressively expanding.

Lower in pricing, equally comfortable (compared to Starbucks) and serving food that is closer to the palate of the local community, these cafe is a serious threat to international brands.

Cafes like Old Town Coffee serves comfort food that the locals are familiar with. And while its pricing is higher than hawker center, it is lower compared to Starbucks.

Both serves coffee, each which the people is familiar with, which outlet would they go to?

It is no wonder that they are expanding when Starbucks is experiencing slower growth.

Banking just on sheer marketing poweress, Starbucks would have to do a lot more to prevent its traffic from eroding.

There are some new things happening for Starbucks, Via is not yet in this region and there is also the tie-up with Keurig.

All these if coupled with good marketing can get people excited again about Starbucks, the trick is of course in getting interested for the longer term...