JOLLIBEE Food Group recently acquired stakes in Botrista in the US and the Compose Coffee chain in South Korea mark a significant step in the company’s efforts to bolster its presence in the coffee and tea business.

The acquisition of a 10% stake in Botrista, known for its sophisticated beverage-dispensing technologies, aligns with Jollibee’s ambitions to enhance its offerings through convenient coffee and automation, and expand into the coffee market.

Similarly, the purchase of a 70% stake in the fast-growing Compose Coffee chain in South Korea demonstrates Jollibee’s strategic approach to tapping into key coffee markets in Asia.

These acquisitions highlight the group’s proactive stance in diversifying its portfolio and capitalising on the growing demand for coffee and tea products, both domestically and internationally.

By leveraging innovative technologies and entering new markets, Jollibee aims to strengthen its position as a leading player in the coffee and beverage sector.

“⁠It’s not the first time Jollibee is entering into the coffee space – they also acquired Coffee Bean & Tea Leaf, and more recently Common Man Coffee Roasters out of Singapore,” says Andre Chanco, Co-founder of Yardstick Coffee.

“I don’t think these brands necessarily have to synergize with the Jollibee core brand, but there are some backend processes that can help these brands scale, either locally or globally.”

JFC isn’t the first multinational to invest in coffee brands – it’s a way to push them into new markets, and there’s also something in it for them. Asia – and Southeast Asia – traditionally more tea-drinking cultures, are increasingly embracing coffee, and multinationals want a piece of the pie.

“Jollibee is awash with cash and is riding the global coffee trend. They have a growing history of acquiring coffee brands. They know the numbers, and how Asians have taken to coffee versus tea,” says Pacita Juan, President of the NextGen Organization of Women Corporate Directors.

South East Asia has a rising and diverse coffee consumption that attracts investors

The coffee market in South East Asia is experiencing rapid growth and evolution, driven by changing consumer preferences, urbanisation, and a rising café culture across the region.

Countries like Indonesia, Vietnam, Thailand, and the Philippines have emerged as key markets for coffee chains and specialty coffee shops, with a growing emphasis on quality, variety, and experiential consumption.

Consumption trends in South East Asia reflect a shift towards premium and specialty coffee offerings, as consumers seek diverse flavours, ethical sourcing practices, and unique brewing methods. What is most interesting is that the region has a wide diversity of consumer preferences.

“What is unique with the Southeast Asia region is that each market has a ‘default’ coffee,” says Andre. “While sweet coffee drinks dominate across the region, Singapore remains an anomaly with a very simple coffee menu offering. The Philippines has a more utilitarian consumption of coffee, with some coffee shops open 24/7.”

The region’s market strengths lie in its vibrant coffee culture, rich coffee-growing heritage, and increasing disposable incomes, making it an attractive destination for coffee chains and international brands looking to expand their footprint.

“What we’re seeing recently is the venture capital-backed coffee chains, from Kopi Kenangan in Indonesia, Zeus from Malaysia and Pickup Coffee from the Philippines,” says Andre. “These target a different segment of the market with their price positioning, but I think it helps the overall industry in terms of funnelling more coffee drinkers into the habit.”

The acquisition of Compose Coffee chain in South Korea by Jollibee Food Group serves as a strategic entry point into the broader South East Asian coffee market, indicative of the region’s potential for robust growth and investment opportunities.

Over the last three decades, the market has been emerging, which has brought a spectacular rise in coffee consumption to the region’s fast-growing economies. The Philippines was one of the biggest players in the traditional market, followed by emerging markets Indonesia, Vietnam, and South Korea.

“We have always been coffee drinkers in the Philippines, but this has picked up all over Southeast Asia, partly because of the easy access to coffee – from Indonesia to Vietnam, and many imports coming through Singapore,” says Pacita.

 

South East Asia’s rising influence in the global coffee market

The consolidation of coffee chains and acquisitions by key players like Jollibee Food Group underscore South East Asia’s emergence as a competitive coffee market hub.

Coffee chains from Southeast Asia have been expanding beyond their local markets, with specialist coffee and tea shops in the region posting sales soaring to $4.4b in 2023, with an expected 8% annual growth rate through 2028.

The coffee chain landscape in Southeast Asia is poised for further consolidation, with profitable players expanding their footprint and wiping out less profitable ones. Investor funding will play a key role in this development.

The region is also unique in that it counts coffee producing countries, which enters the equation when it comes to market power.

“That, plus a growing middle-class and expanding cafe lifestyle are positive signs that encourage growth in the broader coffee industry,” says Andre. “There are challenges with the higher end of specialty coffee, as some markets have more limited spending power, but we do see some concepts pushing that price point up.”

Diversifying service options to include dine-in experiences and exploring alternative channels such as vending machines, drive-throughs, and subscription services help enhance convenience and accessibility for consumers in the region – a major reason behind JFC’s partial acquisition of Botrusta.

Regional trade agreements are also a boosting factor for the regional coffee market, creating an enabling trade environment that encourages business and boosts consumption.

“Regional trade makes it easier, compared to coffees from other origins that are heavily taxed in countries like Thailand, the Philippines and Indonesia,” says Andre.

Pacita explains  that groups like the ASEAN Coffee Federation, have been conducting regional events to build networking between Southeast Asian states.

“We have also established the ASEAN Coffee Institute, where we teach in our own languages like Bahasa, Filipino, and English, making it easier for our farmers and baristas to learn about coffee,” she says.

Jollibee’s strategic moves in strengthening its coffee and tea business reflect the broader trend of South East Asia’s growing prominence in the coffee industry.

With a thriving market landscape, increasing consumer demand, and strategic acquisitions driving expansion, the region stands poised to shape the future of coffee consumption and trade on a global scale.

 

This article first appeared on Coffee Intelligence, by Sarah Charles on July 12, 2024