Home Brewed

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By Josh Doyle

The Japanese believe a person can never truly master any skill. You can constantly improve, but there is no limit – no endpoint for your mastery. This applies to everything — martial arts, making sushi, and of course, brewing a great cup of coffee.

In line with this idea, it’s safe to say the best coffee in the world is being brewed in Japan. Coffee auctions since 2018, whether they happen in Guatemala, Mexico, or Costa Rica, have all been dominated by Japanese buyers. Brands like Maruyama continue to break records each year as it nabs top-scoring lots judged by Cup of Excellence tasters. Japanese brands increasingly also take home the second and third place picks.

You’d be hard pressed to find a country that has transformed its specialty coffee industry as quickly as Japan. In the 20 years between 1996 and 2016, import quantities of coffee beans in Asia grew from 8 million 60-kilo bags to 19 million – an increase of 139%. To put that in perspective, growth in North America during that same time registered a mere 44%. Europe moved even slower.

Much of this growth has been led by Japan, the world’s fifth-ranked importer of coffee beans, ahead of the UK and Belgium, and the largest importer in Asia. In 2014 the country imported 7.5 million bags of coffee to its shores. Large growth is attributed to healthy markets in ready-to-drink (RTD) and specialty coffee, both of which adapted well to the Japanese obsession with quality.

Now Japan’s coffee industry is shifting. Once a drink for young crowds to enjoy at cafés, people are now looking for ways to bring coffee into the home and drink it on the go. Japanese brands are innovating ways to entice coffee drinkers who want a high-quality brew, without the barista.

Quality brews, minus the café

In 2014, the Japanese consumed 11 cups of coffee per week. What shocked market researchers was that according to the All Japan Coffee Association, approximately seven of those cups were consumed outside a café.

In that same year, 7-Eleven released a filtered coffee at the irresistible price of 100 yen ($0.90). Marketers targeted Japanese coffee drinkers who were too busy to wait in line for a pour-over in their favorite café. Cheap, yet good, it went against the grain of Japanese coffee culture, and was hugely successful.

Within two months 7-Eleven sold more than 450 million cups. McDonalds Japan found similar success with their own 100-yen offering, selling 30 million cups in their first five weeks using sophisticated automatic brewing equipment while promoting high-grade arabica beans. The key in both cases was great taste — due largely to high-quality ingredients. The move to high-grade coffee outside the café setting had begun.

Single-serve growth

Nestlé has also capitalized on Japan’s demand for quality brew at home, appealing to consumers with single-serve capsule machines that produce sophisticated, limited and single-origin espresso.

Japan’s population is aging. And like the rest of the world, their lifestyle is busier, making the convenience of single-serve coffee appealing. It also speaks to Japan’s culture of hospitality, offering an easy and delicious option when guests visit the home. For centuries this was the realm of tea in Japan, but coffee is now seen as a more modern drink and preferred by many Japanese.

Single-serve capsules helped Nestlé maintain its top spot in Japanese coffee sales through 2017, even while sales for their instant coffee declined.

Innovative home brew

Japanese brands viewing in-home consumption take different approaches. Key Coffee’s “Drip On” series, for example, attracts the at-home coffee lover with a system not unlike pouring hot water over a tea bag. The coffee drinker places a disposable single-serving filter over the cup, which rests comfortably on its foldout cardboard packaging. You then pour hot water over the coffee and remove the filter after allowing the coffee time to brew. The special filter creates a slow drip, allowing a more flavorful cup. It combines fresh coffee flavor and a pour-over feel, with the convenience of a single-serving portion. Japanese coffee brands continue to innovate, striving to learn the language of young consumers who know good coffee and want to be able to brew it at home.

A new look in RTD

Japan has a unique relationship with RTD coffee.

It might seem odd that a nation devoted to quality would be so attracted to a canned beverage. The reason is simple: vending machines. Rapid industrialization in the 1960s led to a vending machine obsession in Japan. Coffee was a fixture in those early machines and several decades later RTD coffee remains a strong seller, taking up around three of those weekly 11 cups consumed by Japanese.

Japan’s RTD market hit a snag in 2017 when sales declined due to competition from cheap convenience store alternatives. In response, creative RTD brands like Boss, owned by Japan’s Suntory Beverage & Food, succeeded in rebranding themselves and creating new products to meet Japan’s shifting demand.

The 2017 release of Craft Boss launched in a PET plastic bottle instead of the traditional small can. The new look has a craft brewed feel. Suntory’s marketing campaign focused on this shift, claiming this is a “BOSS that’s not canned coffee.”

The premium look lured customers with a promise of quality that canned beverages failed to communicate, grabbing the attention of office workers in their 20s and 30s. This marks an evolution as the sector continues to up its game, producing better quality products and marketing them at a more quality focused consumer.

The world’s highest grossing RTD coffee beverage, Georgia, is owned by Coca-Cola and made with Colombian arabica. Coke understands that the desire for easy-to-consume drinks has not disappeared – it has simply moved away from sugar-filled products that are viewed as unhealthy.

In Japan and other Asian nations, coffee and tea hold strong as ideal packaged alternatives. Georgia’s senior v.p. of marketing Takashi Wasa claims their success is owed to constantly striving to make the product better, and for a soft drink manufacturer like Coca-Cola, RTD is one of several strong paths forward. Brands with expansive distribution and an efficient supply chain, that understand packaging, and can appeal to today’s health and quality conscious consumer, can count on RTD tea, herbals, and coffee to replace soft drink’s market share.

Japan's next wave

Kyoto roasters are credited with popularizing the first cold brew coffee, which dates to the 1600s. Japan has been ahead of the curve since the early days of specialty. During the past decade, Japanese barista champions have attracted the world to their cafés, offering a blend of atmosphere and style unlike anywhere else. But Japan’s next coffee innovation will bring that obsession with quality into the urban kitchen of a working 30-year-old; a 20-something commuter on the daily bullet train, or delivered to a university student stepping out of the convenience store with a takeaway cup in hand.

Brands have their work cut out for them. The most successful will combine top-quality beans from the best sources using state-of-the-art brewing techniques to deliver single-serve convenience. The trend toward premiumization is well established.

Retail reports show that the sales are there for the taking, thanks to a coffee culture where consumers are willing to pay for the best coffee in the world.