This is an English adaptation of a FoodBud historical article originally published on August 3, 2022.
According to 7.5 Degree, Southeast Asia was emerging as one of the world’s fastest-growing coffee-consumption regions by 2022, supported by a 600 million-person market, rising middle-class incomes, local coffee-growing advantages, and increasingly competitive branded retail formats.
Statista expected Asian coffee industry revenue to reach US$120.087 billion in 2022, with a 6.72% CAGR from 2022 to 2025.
Southeast Asia sits within one of the world’s three major coffee-growing regions, alongside East Africa and the Arabian Peninsula, and Latin America.
Indonesia and Vietnam are the region’s export heavyweights. In 2017, Indonesia and Vietnam were among the world’s largest coffee producers, accounting for 18% and 6% of global production, respectively. Vietnam exported coffee to 80 countries and regions, held 14.2% of the global coffee-bean export market, and had remained the world’s second-largest coffee exporter for many years. In 2012, Vietnam even surpassed Brazil as the world’s largest coffee exporter. Indonesia ranked fourth globally, after Brazil, Vietnam, and Colombia.
Robusta is the workhorse crop across much of Southeast Asia, while Arabica remains important in higher-quality segments. Arabica is generally softer, fresher, slightly sweet, and sometimes mildly acidic; Robusta is lighter in flavor and more bitter, but attractive to growers because of higher caffeine content, higher yield, and stronger disease resistance.
Indonesia’s coffee exports were about 75% Robusta and 25% Arabica. Indonesia also produces Kopi Luwak, one of the world’s most expensive coffees, with prices reportedly reaching as high as US$3,000 per kilogram because of limited supply.
Vietnam grows more Arabica in the north and more Robusta in the south. The Vietnam Academy of Science and Technology estimated national average coffee yields at 2.3 tons per hectare, with some plantations exceeding 3.5 tons per hectare.
Laos is also one of Southeast Asia’s larger coffee producers and exporters, known for higher-quality Arabica. World Bank data identified coffee as one of Laos’s top ten economic income sources. In April 2018, Dao-Heuang Group, Laos’s largest coffee producer, signed a trade agreement with Kunming Kanglin Food Import & Export Trading Co. to expand coffee business in China.
The Philippines has coffee production in 63 of its 71 provinces and is one of the few countries producing all four major varieties: Robusta, Arabica, Excelsa, and Liberica. About 90% of Philippine output is Robusta.
Singapore does not grow coffee beans at scale, but it plays a trading role. As a free port with free-trade agreements with more than 20 countries and regions, it is positioned as a neutral hub between Asian and global production and consumption markets. Singapore Coffee Association and ASEAN Coffee Federation chairman Ma Fenglong noted that coffee stored in free-trade-zone warehouses avoids import duties, which is attractive for import-export operators.
International Coffee Organization data cited in the article showed Asian coffee consumption rising 1.5% over the prior five years, compared with 0.5% in Europe and 1.2% in the United States. Tridge expected Asia’s coffee culture to keep expanding over the long term, with 2022 consumption continuing steady growth versus 2021.
The demand shift was tied to middle-class growth. East-West Center and other 2021 research projected that the middle class across the 10 ASEAN countries would reach 350 million people by 2030, more than double the 135 million in 2015, and represent 51% of the population by 2030.
Consumer behavior was also changing. In hot, humid Southeast Asian markets with long-standing sweet-tea habits, younger urban consumers were shifting toward black coffee and lower-sugar drinks. COVID-era health awareness accelerated this shift, while sugar taxes in Thailand, the Philippines, and Malaysia from 2017 to 2019 pushed some consumers toward unsweetened or lower-sugar coffee.
Thailand began taxing sugary drinks in 2017. In the second phase, from October 1, 2019 to September 30, 2021, drinks with 10-14 grams of sugar per 100 ml were taxed 1 baht, 14-18 grams were taxed 3 baht, and more than 18 grams were taxed 5 baht. Malaysia taxed drinks with more than 5 grams of added sugar or sweetener per 100 ml, and juices with more than 12 grams of sugar per 100 ml, at 0.4 ringgit per liter. The Philippines taxed sweetened drinks at 6 pesos per liter and high-fructose drinks at 12 pesos per liter. Philippine sugary-drink consumption fell 8.7% in 2018.
ICO data showed Southeast Asian coffee consumption rising from 8.4 million 60-kg bags in 1990 to 19.5 million 60-kg bags in 2012, more than twice the pace of global coffee-demand growth. Economist Jeffrey Sachs said at the World Coffee Producers Forum that the market with real future coffee demand would be in Asia.
In Indonesia, coffee is a preferred social drink for many young consumers in a Muslim-majority market. The Jakarta Post reported that per-capita consumption rose from less than 0.5 kg in 2013 to more than 1.1 kg in 2019. Popular formats include sachet instant coffee and Kopi Tubruk, a Robusta-based black coffee.
Vietnam’s signature ca phe sua da combines coffee, milk, and ice. It is typically Robusta-based, strong and bitter, balanced with sweet condensed milk, and brewed through a drip filter over roughly 5-10 minutes. Vietnam’s coffee consumption rose from 0.43 kg per person in 2005 to 1.38 kg in 2015, one of the fastest increases globally. Vietnam’s Ministry of Agriculture and Rural Development expected consumption to rise another 10%-15%.
Thailand’s traditional Kafae Boran resembles Vietnamese coffee but uses a different brewing method. It can include roasted Robusta beans plus brown sugar, corn, brown rice, sesame, soybeans, salt, butter, or tamarind seeds, then is filtered through a cotton bag and served with sugar or evaporated milk. Specialty coffee expanded in Thailand in the late 1990s, but Kafae Boran stalls remained a cultural symbol.
Malaysia’s traditional kopitiams are often operated by descendants of Hainanese and Fujianese communities. Malaysian coffee is roasted with butter, sugar, and beans in a hot pan, creating a rich aroma. White coffee and Hainanese coffee are signature formats.
The Philippines has a stronger coffee than tea preference. Its traditional Barako black coffee is strong and made from Liberica rather than the Robusta used by many Southeast Asian neighbors.
Singapore, despite being only 728.6 square kilometers, was described as one of the world’s eight best coffee cities and the only Asian city on that list. Coffee is more popular than tea even though ethnic Chinese account for about three-quarters of the population. Common local Kopi uses more acidic and full-bodied Robusta beans roasted at high temperature with sugar and margarine.
Euromonitor International estimated that coffee retail sales across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam reached US$6.5 billion in 2019, with a 6% CAGR from 2014 to 2019, above the global average of 5%.
The article cited Sanwan Capital’s view that coffee’s value chain is long, but profit is concentrated downstream: cultivation and rough processing account for about 1% of profit, refined processing 6%, and downstream sales 93%.
Coffee products in Southeast Asia span instant coffee, ready-to-drink coffee, and freshly ground coffee, distributed through chain cafes, specialty cafes, automated coffee machines, convenience chains, supermarkets, delivery platforms, and ecommerce. International freshly ground coffee brands cited include Starbucks, Pacific Coffee, and Costa; Chinese examples include Luckin, Manner, M Stand, and Coffee Box. RTD examples include Nestle, Starbucks, and UCC, alongside Nongfu Spring and Master Kong in China. Instant examples include Nestle and Maxwell, alongside Yongpu, Saturnbird, and Secre.
Sanwan Capital said coffee gross margins were generally around 50%-70%, with RTD coffee highest at 70%-80% and instant coffee still reaching 30%-50%. Fore Coffee CEO Vico Lomar told 7.5 Degree that Starbucks’ peak gross margin in Indonesia could reach 72%, while most Indonesian coffee players were below 60%.
Robusta-heavy Southeast Asian supply supports instant coffee. In the Philippines, 70% of annual coffee production of 88,000 metric tons was used for instant coffee. A sachet of instant coffee at a small neighborhood store cost about 8 pesos, or US$0.18, while freshly ground coffee in specialty cafes cost about 100-160 pesos, or US$2.25-US$3.60. Regional instant brands include Thailand’s Khao Shong, Malaysia’s OldTown White Coffee, and Vietnam’s Trung Nguyen.
Kopi Kenangan raised US$96 million in Series C funding in December 2021, becoming a unicorn. Founded in 2017, it had opened more than 600 stores in 45 cities, said it served 40 million cups in the previous 12 months, and expected to serve 5.5 million cups per month in Q1 2022. The funding was intended to accelerate Indonesian expansion of Cerita Roti, Chigo, and Kenangan Manis.
Fore Coffee was incubated in 2018 by Indonesian early-stage investor East Ventures, using Luckin Coffee as a reference model. Founder Willson Cuaca saw coffee as a standardized entry product for testing online new retail. CEO Vico Lomar said Fore Coffee’s gross margin was about 66% and that the company became profitable in Q4 2021. Its cost controls included working with local coffee-bean exporters, semi-centralized procurement for ingredients such as syrups, and renegotiated packaging prices through bulk purchasing.
Singapore-based Flash Coffee, founded in 2019 and backed by Rocket Internet, raised US$15 million in Series A funding in April 2021 to expand across 10 ASEAN markets. It operated in more than 50 locations across Singapore, Thailand, Indonesia, and other countries, said most stores were profitable, and planned to add 300 stores that year.
In Vietnam, Trung Nguyen and Highlands Coffee were major chains. Trung Nguyen, described as the world’s largest Robusta coffee producer, sold heavily domestically, operated stores across Vietnam, targeted different age, gender, income, and taste groups, and exported products to many countries. Its products were sold in nearly 30,000 supermarkets and convenience stores in China and on Taobao and Tmall.
Highlands Coffee took a more internationalized route and was called a “Starbucks of Vietnam,” with visible branding, outdoor seating, red-and-black uniforms, and a middle-class target customer. The Coffee House was also compared with Starbucks because of its “third place” positioning, service training, free high-speed Wi-Fi, and comfortable stores. Founded in 2014 by Dinh Anh Huan, founder of Seedcom and an early investor in Tiki, The Coffee House had more than 170 stores in Vietnam by the end of Q1 2021 and planned to reach 1,000 stores by 2025.
Thailand’s Cafe Amazon, owned by PTT Public Company Limited’s retail arm and founded in 2002, operated more than 3,000 stores in Thailand and nearly 300 overseas outlets in Cambodia, Laos, the Philippines, Oman, Myanmar, Vietnam, China, Singapore, Malaysia, and Japan. It expected to increase overseas stores to 1,000 by 2025.
i-Buzz Asia research found that local brands accounted for six of Malaysia’s top 10 coffee brands, while U.S. brands accounted for three. Malaysian formats included new-style traditional coffee shops, hybrid cafes, donut cafes, and internet-delivery coffee. Zus Coffee, compared with Luckin, had reached 150,000 app downloads and sold more than 4 million cups since its launch at the end of 2019.
Major international chains including Starbucks, Costa Coffee, Gloria Jean’s Coffees, and % Arabica source coffee beans from Brazil, Vietnam, and Indonesia, and also see Southeast Asia as a consumption market.
Starbucks entered Southeast Asia in 1996 with its first store in Singapore and operated in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Howard Schultz said Southeast Asia’s 600 million-plus population, rising middle class, and growing economy created a major opportunity.
Starbucks’ regional ties predate its stores: since 1971, Sumatra in Indonesia has been a key supply area for high-quality Arabica beans. Starbucks said Sumatra Dark Roast Coffee was its best-selling single-origin coffee globally, and Sumatran beans appeared in blends including Anniversary Blend, Thanksgiving Blend, and Tribute Blend. In January 2019, Starbucks and PT Sari Coffee Indonesia opened Starbucks Dewata Coffee Sanctuary in Bali, its largest Southeast Asian store at about 20,000 square feet, selling more than 100 Dewata-exclusive beverages, foods, and merchandise, including lavender latte.
Financial Times data for Q4 2015 showed Starbucks ranked first in visits in Indonesia, Malaysia, Thailand, and the Philippines, but not Vietnam. Dunkin’ Donuts, The Coffee Bean, and McCafe were also common regional competitors. Allegra Strategies World Coffee Portal reported in 2015 that across Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, mainland China, Hong Kong, and Taiwan, Starbucks held 20% market share with more than 3,200 stores, including more than 1,700 in China. McCafe ranked second by share, with more than 1,500 stores across the nine markets.
In August 2021, Nestle and Starbucks announced a partnership to launch Starbucks bottled and canned RTD coffee in selected Southeast Asian, Oceanian, and Latin American markets in 2022, including products such as Doubleshot and Frappuccino through supermarkets and online retailers.
Japanese and Korean-linked beverage brands were also active. In November 2021, Suntory Group launched Boss coffee in Thailand, targeting white-collar consumers and premium-drink buyers at 25-35 baht, or US$0.77-US$1.07, about 20% higher than typical Thai canned coffee. Asahi Group expanded Wonda in Southeast Asia, launching halal-certified instant coffee in Malaysia in October 2021 and selling Wonda products in Singapore and Brunei, while considering other markets.
PepsiCo worked with BlackPink in 2021 to promote limited-edition RTD coffee products across Asia-Pacific. Malaysia and Singapore 7-Eleven stores also carried limited-edition HY Coffee Range products endorsed by BTS.
Price remained a key challenge. An Asahi manager said low Southeast Asian price levels, compared with Japan or Western markets, made profitability harder. Local brands used value pricing to compete: Kopi Kenangan typically sold cups at 18,000-22,000 rupiah, or US$1.26-US$1.53, about half Starbucks’ minimum US$3 price; Fore Coffee was about US$0.70-US$1.20 cheaper than Starbucks on average; Flash Coffee sold a latte for S$4.80, or US$3.56, about 45% below Starbucks’ S$7, or US$5.21; The Coffee House targeted US$1.30-US$2.50 per cup.
Vietnam showed the strength of national brands. In Financial Times Q4 2015 visit data, Starbucks had only 6% of visits in Vietnam, compared with Trung Nguyen at 49% and Highlands Coffee at 26%. Statista data showed Highlands Coffee had 2019 pretax profit of 84 billion dong, or about US$3.6 million, versus Starbucks at 52 billion dong, or US$2.26 million. Starbucks added only six Vietnam stores in 2020 and had 68 stores by mid-March 2021, while Trung Nguyen and Highlands Coffee each had more than 300.
COVID-19 sharply hit offline coffee foodservice. GlobalData data cited in the article said away-from-home beverage consumption represented 26% of Southeast Asia’s total beverage market before the pandemic.
Euromonitor International data showed Southeast Asian coffee foodservice sales volume fell 20% in 2020 versus 2019 as movement restrictions, home quarantine, and lower dining-out frequency forced many cafes to close temporarily or permanently. Delivery platforms such as Grab, Foodpanda, and GoFood saw order growth, but delivery sales were unlikely to fully offset dine-in losses.
Coffee retail was more resilient. Euromonitor said Southeast Asian coffee retail sales grew 3% in 2020, helped by ecommerce. From 2014 to 2019, Southeast Asian ecommerce had grown strongly overall, but grocery, food, and beverage ecommerce penetration remained low. COVID changed habits as remote work and safety concerns pushed more consumers online. In 2020, ecommerce across six Southeast Asian countries grew 53%, while food and beverage ecommerce was estimated to grow 96%.
Fore Coffee’s Vico Lomar said the company’s O2O model helped it weather the pandemic because it was not fully dependent on offline stores. Fore Coffee already sold through Gojek, Grab, and Tokopedia; after COVID hit, 55% of orders came from online channels and 45% from offline.
At-home coffee also benefited. Thailand saw strong growth in DIY coffee kits as remote workers prepared coffee at home. Singapore saw strong 2020 retail growth in coffee bags for convenience and speed.
Lower disposable income made affordable retail coffee more attractive, especially instant coffee. Indonesian coffee sellers began offering 500 ml and 1 liter bottled RTD coffee through ecommerce platforms. Some Malaysian brands, including Nescafe and Kopi Tarik, leaned into nostalgia by positioning RTD products as tasting like traditional kopitiam coffee.
Health claims also influenced product development. GlobalData research cited in the article found 42% of Southeast Asian consumers considered immunity-boosting claims highly appealing. The article cited Northwestern University research associating two to three cups of coffee per day with a 10% lower COVID-19 infection risk versus less than one cup, attributing possible effects to caffeine, polyphenols, and other immune-related compounds. Fore Coffee launched four new product series in 2021, including a Manuka Series using New Zealand manuka honey.
For foodservice-chain operators, the article’s core message is that Southeast Asia combined origin-market advantages with a fast-developing branded retail opportunity. The strongest local players were not simply copying Starbucks; they were adapting format, pricing, procurement, app ordering, delivery, and product localization around regional consumers.
The market also showed a split opportunity: affordable instant and RTD formats served mass price-sensitive demand, while app-enabled fresh coffee chains used value pricing to build frequency among urban middle-class consumers.
Note: all financing amounts, growth forecasts, store-count targets, COVID-era data, and 2022-2025 forward figures are historical figures from the original August 3, 2022 article.