Saturday 13 April 2024
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South Korea: High coffee price leaves a sour taste

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By Choi Sung-jin*

A cup of Americano sells for 1,000-1,200 won ($0.82-$0.98) at convenience stores. In Starbucks and other coffee bars, the same coffee fetches 4,000 won to 5,000 won. Their production costs are similar, however, remaining below 500 won a cup, industry sources said last week.

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And that means places that demand prices four times higher are not using coffee beans four times better in quality, they said.

CU, a C-store franchise, has sold a 12-ounce (340-gram) cup of Americano at 1,200 won since December.

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“We use the best coffee beans from Colombia and Tanzania at a 7-3 ratio,” said BGF Retail, which runs the franchise. Yet the share of the production costs of coffee beans, including roasting and distribution, account for only 30-40 percent of the selling price, it said.

A businessman who supplies coffee beans to C-stores and coffee shops agreed. “We roast beans separately to suit the flavor and taste as demanded by different clients, but there are little differences in supply prices,” he said.

The wide gap in selling prices is due to differences in rent, interior expenses and labor costs, the sources said. Starbucks and Coffee Beans have to operate stores in commercial hubs, hire dozens of workers and spend heavily on interior decoration.

Convenience stores need no more than the existing space and personnel, plus a coffee machine.

“We provide differentiated services by employing not part-timers but full-time workers and decorating each of our stores with different concepts to allow clients to enjoy the highest-quality coffee,” said an official at a large coffee bar franchise.

All these differences notwithstanding, coffee prices eight times higher than production costs are too much, a consumer activist said.

A comparison of coffee prices in major cities of 13 countries last month showed the price of Starbucks Americano was second-most expensive in Korea at 4,100 won.

It was 18 percent higher than in Japan (3,475 won) and 45 percent higher than in the United States (2,821 won), he said.

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