Coffee, Corona, and Korea – STiR Coffee and Tea Industry International

Coffee, Corona, and Korea – STiR Coffee and Tea Industry International

By Joel Petersson Ivre

At Café Fred & Sally in Seoul’s Seokyodong neighborhood, the scent of chocolate cake and medium roast is so thick that at first, the jazz music that playing from hidden speakers is barely noticeable. The crowd, however, is thinner.

After months of sporadic yet manageable small-scale outbreaks, South Korea is experiencing a second peak in coronavirus infections. Fred & Sally’s resident barista, Lee Dahye, explains that at this time in the afternoon, workers from the surrounding offices usually gather for a quick afternoon cup of coffee, but the coronavirus has reduced customers to a trickle. The rest of Seoul’s 42,600 coffeeshops are similarly empty. With the worst yet to come for South Korea, a coffee market valued to 6.8 trillion won (US$5.8bn) in 2018 — and once expected to hit 8.6 trillion in 2023 — is being put through the grinder.

Making things worse, cafés have become a hotspot for virus spread. Although visitors are noticeably fewer, the air-conditioned spaces become an ideal vector for the airborne virus. Korean newswire service Yonhap even ran headlines like “S. Koreans’ coffee craze turns out to be hurdle in virus fight.”

At the end of August, the local government in Seoul forbade large franchised coffee chains like Starbucks, and local competitors like Ediya Coffee and Holly’s Coffee, from offering in-store seating. Under so-called “level 2.5 measures,” these stores may only provide take-out or delivery. So far, non-franchised coffeeshops have— mercifully — been spared such measures, but an extended period on semi-lockdown would no doubt affect small independent coffee shops as well.

The smart roasters

The future of coffee in South Korea — where the average citizen consumes 353 cups of coffee per year — thus seems bleak. But not to everyone. There is some cause for optimism in a futuristic-looking warehouse in Seoul’s southwestern Geumcheon district.

It may not be immediately obvious from the name, but Stronghold Technology manufactures smart coffee roasters. Blending South Korea’s affinity for coffee with its notable expertise in all things hi-tech, Stronghold offers roasting profiles — a set of instructions and parameters for the roasting machine itself — that can be accurately replicated over multiple roasting batches, according to its c.e.o. and founder Jason Woo.

Since its inception in 2010, Stronghold has based its core business around the influx of independent cafés in Korea that was taking place at the time. Along with Seoul’s proliferation of franchised convenience stores, fried chicken joints, and Korean BBQ spots, these cafés began to crop up after the latest financial crisis, run by retired (or fired) professionals of South Korea’s conglomerations and mid-sized businesses.

Such small businesses all have in common that they do not require much expertise or up-front investment, and thus the barrier of entry is low. But this leads to stiff competition, and the proverbial barrier of exit is equally low. Most cafés end up closing within the first year, and more than half of them close within five years, says John Lee, Stronghold’s international business development manager.

One of the upfront costs that aspiring café-owners do face is the procurement of coffee, which is why Stronghold has tried to make its roasters easy to use, even for first-time users, Lee explains. This results in what they term “distributed roasting.”

Considering the empty tables at Fred & Sally’s and similar small-scale coffee shops, do Woo and Lee consider it a problem that their reliance on small businesses may now come back to bite them?

“Certainly, it is a double-edged sword in that respect, but we look at it in a different way. Traditional cafés rely 100% on in-store visitors, and that was 100% of their revenue. But if you are roasting, another product that you can offer is roasted coffee that you can enjoy at home,” Lee says.

Indeed, during the pandemic, many stores are transitioning from selling coffee as a drink, to selling their own roasted beans, an observation which Stronghold bases on the information that it receives directly from its customers’ internet-connected roasters.

This move is not just borne out of necessity but plays into a larger trend that was already happening, explains Woo. Coffee tastes and ways of consumption are diversifying in South Korea, and the impact of the coronavirus is at most expediting that process. According to statistics aggregator Statista, the vast majority revenue from roast coffee comes from out of home purchases, but by volume, Koreans drink twice as much roast coffee at home.

“After corona, the role of the café will not just be a place to drink coffee. You may be able to drink coffee of course, but cafés will offer more delivery, and sell coffee beans and offer a more diverse range of coffee products,” says Woo.

Stronghold’s most recent project is to take distributed roasting to the next level. The company is making roasting profiles from world-class roasters and barista champions available to their customers across the world, making it possible for even novice baristas to replicate the taste of a roast from anywhere in the world. With updates of the latest virus-related restriction directives setting phones around the country abuzz almost every hour, it is strangely comforting to hear John Lee use phrases like “with the world so connected nowadays” and “bridging the gap” as he explains the idea.

Back at Fred & Sally’s for a morning cup of coffee, Lee, the barista kindly asks that customers to leave their names and phone number on a sheet of paper next to the hand sanitizer. Between 8:30 and 9:10 AM this morning, four customers have done so. One of them is sitting at a commendable social distance in the opposite corner of the room, occupied with a video call. Even on a rainy monsoon-season morning like this one, the whole scene feels like a reminder of the important place that coffeeshops have in our daily routines, and that it will take more than a pandemic to change that.

The future may not be so bleak after all for South Korea’s small-scale cafés and roasters.

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