Inflation pushes popularity of coffee that costs less than $1 in Korea

[Photo provided by CU]

Coffee fans are shifting toward more affordable options as inflation continues to affect purchasing decisions, leading to rapid growth of instant coffees sold at convenience stores for about 1,000 won ($0.75).

Sales of instant coffees at convenience stores are increasing every year. Corner store chain GS25, run by GS Retail Co., sold 240 million cups of instant coffee last year, the most popular item among all products sold at convenience stores, according to industry sources on Thursday. Another chain, CU, run by BGF Retail Co., also saw instant coffee rise to become its second-most popular product among all items sold, selling 200 million cups last year.

Sales growth for instant coffee at GS25 rose 28.6 percent in 2022, from 25.8 percent in 2020. The rate at CU grew to 24.8 percent in 2022, from 19.6 percent in 2020 and at Korea Seven’s corner store chain 7-Eleven the figure was 25 percent last year, up from 20 percent in 2020.

“With 7-Eleven’s Seven Café launched in 2015, corner stores haave expanded their instant coffee product line on the belief that instant coffee would have great potential to bring in consumers to corner stores, like cigarettes do,” one industry source said.

The biggest attraction of corner store instant coffee is their low price. An instant coffee equivalent to an Americano is sold at these stores between 1,200 won and 1,300 won, about 30 percent to 40 percent the price at a coffee shop where an espresso-based Americano usually goes for around 4,000 won to 5,000 won.

Some instant coffee products are as cheap as 200 won, after vouchers and membership-based discounts are applied. CU is promoting a discount event for its extra-large iced Americano in May. Consumers can get a 500 won basic discount, plus a 600 won discount based on a voucher provided on the convenience store’s platform and an additional 100 won off based on telecommunications carrier membership, according to the chain store. On top of all this, consumers can further enjoy a 30 percent additional discount during May, making a cup of coffee as cheap as 200 won.

GS25 will also have a time-based promotion for its instant coffees in May. Between 7 a.m. and 10 a.m., the chain store will sell its hot and iced Americanos for 300 won cheaper, while offering a buy-one-get-one-free promotion for its mint mocha latte and cacao espressos. As more people tend to buy desserts together with their coffee, the store will also give 1,000 won off on purchases of its in-store bakery products along with an instant coffee. 7-Eleven will also offer all of its in-store instant coffees at half price when paid for with Kakao Pay Money throughout May.

As competition grows for better instant coffee taste and flavor, more corner stores are now equipped with higher-end coffee machines that cost more than 10 million won per unit to install. CU plans to install La Cimbali automatic coffee machines from Gruppo Cimbali SpA in more than 6,000 of its stores nationwide.

Gruppo Cimbali is the top global commercial coffee machine maker. CU previously used Chinese coffee machines made by Suzhou Industrial Park Kalerm Electric Appliance Co., which only cost about 3 million won to install, but has been introducing the Italian machines in its stores since mid-2022.

This trend of higher-end machines in convenience stores was first started by GS25. The chain store installed coffee machines made by Swiss company Jura Elektroapparate AG, which cost more than 13 million won per unit, when it launched its instant coffee brand Cafe 25 in late 2015. That machine has a bypass function that supposedly helps to remove bitterness from the coffee with separate pipes for the espresso and the hot water.

Another chain store, Emart24 Inc., run by Emart Inc., has been using high-end coffee machines that cost more than 10 million won each in its stores since 2021.

In attempts to win the taste and flavor wars, convenience stores are now paying more attention to coffee beans, with focuses on blending and roasting, as well as packaging for better taste and flavor. As part of such a move, GS25 has re-blended its beans this year.