JIN-239 -- Doutor Execs Feel Quite Comfy Competing with Starbucks

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 239
Thursday, August 14, 2003


++ Viewpoint: Doutor Execs Feel Quite Comfy Competing with Starbucks

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++ Viewpoint: Doutor Execs Feel Quite Comfy Competing with Starbucks

Japan-bashing remains a popular sport, and though the economy is now
visibly improving, there are plenty of ways it can be played. One of the
favorite lines of attack is to find a successful US or European company
and remark on how comprehensively it has beaten its nearest Japanese rival.

But it is a game that really cannot be played with Starbucks. It may have
conquered the rest of the known world, but Seattle痴 second most lucrative
export after Windows has not yet dominated Japan. Nor is it likely to.

On the surface of it, all the right ingredients are there. As Levi's, Coke,
Marlboro and countless others have found, the Japanese are easily wooed
into adopting a little piece of Western culture, especially one that is so
compellingly presented as 田ool.・Four hundred and fifty Starbucks coffee
shops have sprung up across Japan, and the customers appear to be flocking
to get their hands on icy Frappucinos or steal 40 winks in one of the big
comfy chairs. In its usual way, Starbucks has snapped up some lively
locations for its outlets and appears to have planted its flag in yet
another market.

It was all perfectly on track for yet another round of local supremacy
except for the emergence of one problem: Doutor Coffee.

What Starbucks may not have realized in its headlong quest for domination
was that the Japanese ・ unlike the Brits, the Chinese, the Germans and
everyone else ・ never needed converting to comfortable coffee-shop culture.
Since the 1970s they have had Doutor Coffee shops across the country and a
thriving version of the 電ouble market・that Starbucks always trumpets (the
morning rush and the daytime treat). Not only that, but Doutor recognized
more than two decades ago that decent finger food goes very nicely with
java; it pulls in the masses with nosh as well.

Doutor has more than twice the number of coffee shops than Starbucks, and
because it was here first, often has the edge on desirable locations. Doutor
has even given Starbucks a direct run for its money by opening Excelsior
Caffes and giving Japanese a home-grown version of the real thing. It is
important to realize the importance of that last part. Japanese tend to
love imported concepts when they first come out, but are equally easily
converted to the domestic version when it does the whole concept in a way
that is specifically tailored to the Japanese market. Beer was introduced
by the Dutch and Portuguese, but Super Dry outsells everything.

We caught up with some of the Doutor executives and asked them whether they
were worried by Starbucks ・ we couldn稚 help remarking on the fact that
Seattle痴 finest has cheekily opened a branch right opposite Doutor痴 Tokyo
headquarters. They really surprised us with their answer: They were
absolutely delighted that Starbucks had come to Japan and had two big
reasons for being so. The first was that it has enhanced the concept of
coffee-shop culture and prompted a little renaissance in afternoon sipping
among women. But the second reason was critical: Doutor, like every other
company in Japan, had previously been suffering the effects of deflation.
It had lost its pricing power and was no longer able to raise the cost of a
coffee whenever it wanted to. When Starbucks came along and persuaded the
Japanese that it was alright to part with 350 yen for a skinny latte, Doutor
was able to do the same.

--The Editors

典o Brew or not to Brew?・from our August 2003 issue (subscription required)

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Written and edited by J@pan Inc staff (editors@japaninc.com)


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