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Starbucks sets sights on Asian expansion

News, 14 January 2016

PHNOM PENH: Global coffee giant Starbucks is setting its sights on expansion in emerging Asian markets over the next five years, where socially-savvy Gen Z offer the next generation of business.

The Seattle-headquartered company is looking to stake a claim in South East Asia, where a thriving local coffee culture exists, as well as expanding into greater China.

China – traditionally a tea-drinking nation – has one of the world's fastest growing coffee markets, especially in cities. Euromonitor forecasts Chinese coffee consumption rising 18% annually to 2019, compared to US growth of just 0.9%.

According to the Wall Street Journal, Starbucks – which already operates 2,000 stores in 100 Chinese cities – plans to open 500 stores in China every year for the next five years, with China eventually emerging as the top market for the brand.

Cambodia is the next prospect for Starbucks, but market experts believe the company may face challenges there.

Recent research for TNS, reported in Cambodia Daily, reveals that 70% of the kingdom's population is under the age of 30, and more status conscious than ever. A huge 82% of Cambodian youth felt social status is the most important aspect of their life, according to the report. Almost two thirds of respondents 62% say they chose their brands to showcase their success, with Western brands particularly attractive.

While the demographics are favourable, Starbucks – as a challenger brand in the market – will need to provide a clear point of differentiation from the numerous other Westernised coffee chains in the country.

A growing middle class and young people, more educated about coffee, has made Cambodia a hot market for coffee brands, said Luu Meng, president of the Cambodia Hotel Association, in comments to Cambodia Daily.

"As the economy continues to grow, I think lifestyles will continue to change—people would want to taste different types of coffee," said Meng.

"Coffee culture has grown throughout Asia, and it will become more popular here among our young people."

Data sourced from Wall Street Journal, Cambodia Daily; additional content by Warc staff