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Market perks up with Starbucks

A pedestrian walks by a Starbucks Coffee shop in San Francisco earlier this year. Yesterday Starbucks announced that it would open a shop at the Phnom Penh International Airport by the end of the year, with a second store slated to open early next year.
A pedestrian walks by a Starbucks Coffee shop in San Francisco earlier this year. Yesterday Starbucks announced that it would open a shop at the Phnom Penh International Airport by the end of the year, with a second store slated to open early next year. AFP

Market perks up with Starbucks

US-based coffee giant Starbucks is set to enter the Kingdom’s coffee market later this year, going head-to-head with a number of well-established international and local brands, including popular Cambodian cafe Brown Coffee.

The Seattle-based Starbucks will open its first café in the newly built terminal at the Phnom Penh International Airport later this year, with plans to open another location in the city in late 2016, according to a company statement released yesterday.

“We look forward to becoming a part of Cambodia’s local coffee culture, embracing its traditions and sharing our deep passion and knowledge of the best coffee from around the world,” said John Culver, Starbucks’ group president for development and emerging brands across China and Asia-Pacific.

Cambodia currently has a wide range of local, chic cafes across its major cities, as well as popular international chains like Gloria Jean's, The Coffee Bean & Tea Leaf and Costa Coffee.

Luu Meng, co-chair of the government-private sector working group on tourism and prominent restaurateur, welcomed the variety of choices for consumers and said any coffee contest would be determined by Cambodia’s discerning customers looking for quality.

“You can be a great local brand, but if you don’t have quality then you will die,” Meng said. “You can be a famous international brand, but if you do not deliver the quality you will also die.”

Starbucks is unlikely to make a huge dent in the market early on with just two stores, according to Kouch Sokly, president of the Cambodia Restaurant Association.

“So for them [Starbucks] to come here, to me, it is just another coffee chain coming,” Sokly said. “The impact to business or brand [to other cafes], I don’t know if it will be a lot.”

With 10 outlets across Phnom Penh, Brown Cafe and Bakery is the Kingdom’s most popular coffee house, and poses Starbucks’ greatest Cambodian competition.

Sokly said that Brown Coffee was not only providing high-quality coffee, but was also giving Cambodians a trendy place to go to, whereas Starbucks is expected to maintain the same design across all cafes.

“To us local people, if you will pay the same amount of money [for coffee], then why not sit in a better environment,” Sokly said.

While keeping one eye on the US coffee goliath, managing partner at Brown Chang Bunleang said his home-grown brand is doing the right things to stay ahead of the competition.

“Definitely, we still want to be the leader in the coffee industry in Cambodia, so we will definitely look at them as the main competitor to us,” he said.

He said Starbucks will have to come in on a franchise agreement and that could limit its adaptability to the local market.

“A lot of international brands have their standard operating procedures set,” Bunleang said, “whereas we want to change up the concepts.”

While there was room for Starbucks in the local market, Bunleang said demand may not be large enough to cater for all the cafes in Cambodia over the next few years.

But Crone Lars, a director at airport food and beverage concessionaire Sajibumi, said there are plenty of coffee drinkers to go around. Starbucks’ entry at the airport, he said, will only “make the pie bigger”.

“If you provide a wider array of offerings, they each complement each other,” Lars said. “Everyone benefits from having more offerings.”

Ultimately, once Starbucks moves to the city, it will be Cambodia’s young coffee drinkers that will determine market share.

Sen Tharo, a regular Brown patron, said the cafe “follows the people’s need”.

“Then on the other hand, Starbucks needs to understand its clients to fit in the local market,” Tharo said.

“They need to do it otherwise I will continue to support Brown because I want to promote Cambodian products.”

ADDITIONAL REPORTING BY SOR CHANDARA AND AYANNA RUNCIE

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