Japan's Java wars: Convenience stores angle for coffee market crown

Mon Oct 20, 2014 5:04pm EDT
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By Chang-Ran Kim

TOKYO (Reuters) - Japan's convenience store operators are jostling for eminence in a famously cut-throat industry, and one product has come up trumps for the market's top players - coffee.

Millions and millions of cups of it.

Inspired by a popular 100 yen ($0.93) blend launched by McDonald's in 2008, Seven-Eleven touched off a boom in convenience store coffee last year, lifting Japan's long-stagnant coffee market and rankling rival businesses.

Late last month, Lawson became the latest convenience store chain to offer 100 yen coffee, a move that its president says has already buoyed sales.

Coffee, more than anything else, attracts both new and repeat customers, who typically also spend money on other items, convenience store executives say. Like other fast-food items, it also carries relatively high margins.

"The impact of coffee on customer traffic is huge," Lawson President Genichi Tamatsuka said recently.

As convenience store coffee heats up Japan's 1.3 trillion yen ($12 billion) coffee market, Starbucks Coffee Japan is planning to step up its premium teas and ready-to-drink products.

Convenience stores have been serving machine-made coffee for years but it never caught on due to quality reasons.   Continued...

A woman walks past a signboard of convenience store chain, Seven-Eleven in Tokyo, in this file picture taken July 7, 2011.   REUTERS/Kim Kyung-Hoon/Files