The third wave of coffee

Kim Yong-deok, CEO of Terra Rossa, a domestic coffee-shop brand, will open a new store in Gwanghwamun next month. He is finally coming back to Seoul in a decade. After opening a restaurant in Seoul’s posh district of Gangnam in early 2000, he has been running coffee shops in local cities including Gangneung since 2002. In this year, he plans to open new stores in Yangpyeong, Gyeonggi Province, Gwanghwamun in central Seoul and Jeju Island.

Though people say that there are too many coffee shops in Korea, Kim sees the matter differently based on a few grounds.

First of all, Terra Rossa is showing its annual sales growth of more than 50 percent over the years. Most of all, he thinks the quality of growth outweighs the quantity of growth. People who visited the store with the encouragement of others became regulars after tasting coffee freshly delivered from abroad. The sales of beans are skyrocketing.

Kim has noticed the change in people who apply for a coffee training center besides the coffee shop. In the past, beginners visited the center to learn about coffee. But now owners of coffee shops are coming on the need for retraining. “More and more people have come to aware of different varieties and qualities of coffee beans, just like wine grapes,” said the CEO.

The specialty coffee market has been growing in Korea, which is even bigger in the U.S., the birthplace of famous coffee franchise brands such as Starbucks. This is called "the Third Wave of Coffee."

The first coffee wave was about instant coffee while the second wave was heated up by large coffee franchise brands like Starbucks. But a few small luxury coffee shops such as Stumptown Coffee Roasters and Intelligentsia Coffee are threatening Starbucks. Stumptown is called the second Starbucks. The so-called “the fourth wave” is emerging amid a transparent opening the transaction process from coffee farms to customers.

With the decline of major coffee franchises such as Cafe Bene and Tom N Toms, the Korean coffee market is said to have been at risk. Certain shops of coffee franchises in neighborhood hubs are put up for sale. However, this decline involves only with big coffee franchises, not with the entire coffee market.

The coffee industry says one Korean consumes 465 cups of coffee. The first generation of coffee wave, instant coffee, still occupies 72 percent, while the coffee bean market is just 10 percent. Koreans drink coffee quite as often as meals. But they are now beginning to think about coffee taste. As Kim says, the domestic coffee market still has room to grow.