Singapore (Commonwealth Union)_The Singapore coffee market is already crowded, but brands continue to open new locations in the city-state in hopes success on the island will kick start international expansions.
In the last few months, at least five players – Indonesia’s Kenangan Coffee and Fore Coffee, China’s Luckin Coffee, Canada’s Tim Hortons and Taiwanese specialty coffee chain Louisa Coffee have set up shop in Singapore.
Singapore which opened 30 outlets since March, was Luckin’s first major push outside of China, according to a CNBC check. Tim Hortons has two outlets, Kenangan Coffee has opened four stores since its September arrival while and Fore Coffee and Louisa Coffee each have one outlet.
Edward Tirtanata, co-founder and CEO of Kopi Kenangan, which is a leading grab-and-go coffee chain in Indonesia, told CNBC they had a pretty grand ambition for their international expansion. He said they believe that Singapore and Malaysia are just a stepping stone and they want to expand to a lot more countries than where they were today.
Kopi Kenangan which launched in 2017, operates more than 800 stores across 45 cities in Indonesia and 22 stores across Malaysia.
The brand Known as Kenangan Coffee in Singapore, has opened outlets at Changi Airport Terminal 2, Jewel Changi Airport mall, as well as Raffles City Shopping Centre and Takashimaya Shopping Centre all being locations that typically feature upscale brands and goods.
“There’s no better country than Singapore to jumpstart our global expansion plan. Why? Singapore is a definite hub of Southeast Asia and people all over Southeast Asia fly to Singapore, to travel, simply just to transit, or do business,” said Tirtanata of Kopi Kenangan.
As a global financial hub Singapore’s prominence has attracted coffee brands to the country.
Peng T. Ong, co-founder and managing partner at Monk’s Hill Ventures said, “It is one of these things where if you have a restaurant chain, you want to open in New York City, in London.”
A Starbucks spokesperson told CNBC that they welcome competition because it expands the coffee market and accelerates adoption and vacancy of coffee consumption.
Crowded Singapore market
Singaporeans of all ages, income levels and genders love coffee. A July 2022 survey conducted in Singapore revealed that almost 55% of respondents said they bought coffee in the week prior to the survey.
This is in comparison to the wider Asia-Pacific region which has the lowest per capita consumption of coffee in the world, a Euromonitor International study revealed. The report also noted that coffee consumption is slowly growing as the dominant instant coffee category is mature.
The world’s largest coffee chains like Starbucks and Dunkin’ Donuts already have well established footprints in Singapore.
Starbucks has over 140 stores in Singapore while The Coffee Bean & Tea Leaf has more than 70 outlets and homegrown chain Huggs has 20, according to their websites.
There’s plenty of local competition too. In May, Singapore’s Housing and Development Board stated that were 776 coffee shops located in residential areas or neighborhood shop houses.
Many global coffee chains open locations in upscale malls and commercial areas and their prices also tend to be higher than local options.
A cup of cold brew coffee from Starbucks costs about 6.30 Singapore dollars ($4.73). A cup of black coffee at a local coffee shop retails for SG$1.20 Singapore dollars on average, according to CEIC data.
According to data from Momentum Works that accounted for cost of living and disposable income in key global cities, Starbucks is seen as less premium in Singapore. This gives Singapore “a broader base for international brands.”
Li of Momentum Works said that if coffee is sold for SG $4 or SG$5, they did not think people will have problems paying that amount of money.
The question is how big you want to become in Singapore? Singapore has retained its lead as the world’s best business environment for the next five years, thanks to factors such as economic and political stability, according to Economist Intelligence Unit’s rankings for the second quarter of 2023.
