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Phnom Penh’s new cafe culture

111223_09
Employees make drinks at a Gloria Jean’s coffee shop in Phnom Penh yesterday.

With new establishments popping up all over Phnom Penh, 2011 may have been the year of the café in the capital.

The Boeung Keng Kang I neighbourhood alone saw the opening of NOM, new Brown and Singapore-based Spinellis branches and Bread is Ready Coffee is Done, to name a few.

BRCD has since closed, but its owner is remodeling and hoping to reopen under a new concept and name, Namu, in January.

Demand is driving these openings, insiders say, despite what seems like an already-overcrowded market. And that demand is growing, they say, more among middle-class Cambodians than the city’s expatriate community.

“Expats drink coffee to begin with. That doesn’t change. What is increasing is the quantity of Cambodians who come to find a place to hang out, especially students,” Hok Kang, a managing partner at Brown Coffee and Bakery, said.

Brown opened its first branch in 2009, its second branch a year later, and the third branch, on Street 57, this past July.

On a recent Sunday afternoon, the Brown on Street 57 was packed, the majority of tables taken up by young locals chatting and tapping away on laptops and smartphones.

Lynn Hong, a 22-year-old student with a penchant for iced mocha lattes, came to Brown with a group of friends to escape the heat.

“Before, we didn’t have a place to go,” she said.

Until they discovered cafés this past year, their only hang-out options were supermarkets or karaoke bars.

“The young generation enjoys a better lifestyle,” said Sophea Rith, a 30-year-old who works at a small business and was at Brown to meet with a colleague. “They come because their friends come, so they learn about the new lifestyle.”

It’s a new lifestyle from which entrepreneurs are eager to reap profits.

“This year consumption in Cambodia is drastically booming. This is good for the coffee business,” said Sean C Kang, president of Coffee Bean Cambodia, a franchise of Los Angeles, California-based Coffee Bean & Tea Leaf, which opened its first Cambodian shop in Phnom Penh Tower earlier this month.

Kang, a South Korean national, said that when looking to invest in Cambodia, he considered three factors: dynamic economic growth, trends towards Westernisation and the level of competition.

While the rapid growth of Phnom Penh’s café culture may be noticeable, there is far less competition in Cambodia than in other Asian countries, such as South Korea or Vietnam, according to Kang. And major chains like Starbucks tend to dominate in those markets, he said.

“Cambodia is a nascent market,” he said. “The taste for premium coffee is just developing among the middle class.”

Brandon Cho, owner of the now-defunct Coffee’s Ready Bread is Done and of the soon-to-be opened Namu, pointed to the country’s rising gross domestic product growth and average incomes among the capital’s middle class.

“People who have money want something to do, they try to enjoy it,” he said. “People upgrade their tastes.”

According to Cho, it was management difficulties, not lack of customers, that led him to close CRBD. He was optimistic that Namu would do well under different management.

Both Brandon Cho and Sean Kang, who plans to open a Coffee Bean in Boeung Keng Kang I next year, are unphased by the competition.

“Sometimes supply creates demand,” said Sean Kang. “A café street makes more demand. With one more café, it means that more people come.”

Hank Sok, store manager of Gloria Jeans on Street 51, agreed. “The more competition we have, the more clients we have. Our customers have in fact increased.”

He estimates that the café averages 250 to 300 clients a day.

New cafés hope to succeed by making inroads into the capital’s niche markets.

Carie Phou, co-owner of NOM, which just opened in November on Street 310, said that she and her business partners were confident they had something new to offer – traditional Cambodian desserts not being served in other shops in Boeung Keng Kang.

“Young Cambodians are open-minded, they’re always looking for something new, so entrepreneurs have to feed that,” she said, adding that her shop’s target customers are not foreigners or even high-class Cambodians, but the “working class”.

Carie Phou is also public relations director of the Phnom Penh Special Economic Zone. Like the expansion of the manufacturing industry, she said, so cafés are telling of Cambodia’s economic growth.

“Looking at the cafés, you can tell the spending power of young people has increased,” she said. “It really tells a lot about economic growth here in Cambodia. The youth are the future of the economy.”

Still, the Phnom Penh café market might be nearing saturation. Hok Kang of Brown said he expected to see fewer new cafés in 2012 precisely because of the increased competition.

“We’ll see,” he said with a slight grin. “The strongest will survive.”

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