¥100 convenience-store coffees fuel Japan’s surge into Java big leagues

by and


The fastest-growing drinks market in Japan isn’t craft beer or fruit smoothies. It’s cups of cheap black coffee from the local convenience store.

“Convenience-store coffee is just great, given its low price,” said Kiyoshi Fujimoto, a 50-year-old school teacher in Tokyo. He estimates he drinks coffee from the shops, known locally as conbini, four times as often as from Starbucks Corp., and pays about one-third of the price.

“In my office, only instant coffee is available,” Fujimoto added. “When I want to have a good coffee, I escape from the school to get it at a convenience store.”

Coffee sales at convenience stores surged 48 percent last year, the fastest-growing part of the domestic beverage market, as cups costing just over ¥100 each boosted consumption to a record. Japan is the world’s biggest coffee importer after the U.S. and Germany. Demand per person will eventually be comparable to the U.S. and Europe, said Kazuyuki Kajiwara, general manager at the beverage department of trading company Marubeni Corp.

Bean and product imports reached 459,708 tons last year, according to roasters’ group All Japan Coffee Association.

The biggest suppliers are Brazil, Vietnam and Colombia, government data show. Consumption was an all-time high 449,908 tons last year, the coffee association said.

7-Eleven, which operates 17,600 convenience stores nationwide, plans to boost sales by 21 percent to 850 million cups for the year through February, according to Yasushi Kamata, a company director. FamilyMart Co., the third-biggest operator of convenience stores here, aims to bolster brewed coffee sales 11 percent, said Natsu Takaoka, a spokeswoman.

Starbucks opened in Japan in 1996, its first market outside North America, and now operates 1,100 stores across the country, James Olson, a spokesman for the Seattle-based company, said in an e-mail. Japanese stores are among its most profitable, he said. Starbucks doesn’t disclose how much coffee it purchases for or sells in Japan, Olson said.

Tully’s Coffee, also based in Seattle, has 588 stores in Japan, according to the company’s website.

About 10 percent of Japan’s bean imports supply convenience stores, with 7-Eleven representing about half of that volume, Kajiwara said.

Lawson Inc., Japan’s second-biggest operator of convenience stores, also brews coffee for sale at ¥100 (81 cents) a cup, about the same as 7-Eleven. “Salarymen and housewives are saying that coffees at Starbucks” and other chain cafes are too expensive to buy everyday, said Akio Yoshizawa, deputy director of Lawson’s merchandising division.

Japan’s coffee demand is expected to grow by about 2 percent annually, said Kajiwara at Marubeni, which imports beans for 7-Eleven. Per-capita consumption will expand to 5 kg a year from 3.5 kg, he said.

Sales of coffee brewed by the stores are set to increase 17.3 percent to ¥175.9 billion this year, according to Fuji Keizai, a research group in Tokyo. Japan’s total beverage market shrank 1.5 percent to just under ¥5 trillion in 2014, the researcher said in a May report.

It’s not just demand for freshly brewed coffee that’s increasing.

About 100,000 tons of the total amount of coffee imports were used for production of instant coffee, and a similar amount was used to make canned coffee, according to Kajiwara at Marubeni.

Coca-Cola Co.’s Japanese unit and Suntory Beverage & Food Ltd. are the biggest makers of ready-to-drink canned coffee, sold mainly out of vending machines.

“Convenience stores have created additional demand,” Kajiwara said. “They are selling above-average coffee at the cheapest price in the world.”