Why Is Starbucks Still So Cool Among Young Koreans?

  • By Lee Mi-ji

    May 15, 2021 08:18

    Koreans are mad for Starbucks even as the caffeinated-drink chain's luster fades around the world.

    Every time the Seattle-based chain releases limited-edition merchandise like mugs and diaries, long lines form in front of the outlets here. In the U.S., Starbucks is closing about 400 outlets, but in Korea around a dozen new ones open every month. As of late April there were around 1,550 Starbucks in Korea, and all of them are directly owned rather than franchises.

    The reason is carefully targeted marketing that only seems to work in this country. Korea is the only country where it releases limited-edition goods every summer, and they have become must-have items for the younger generation.

    When Starbucks Korea suggested calling its newest flagship store in central Seoul "byeol dabang" to mark the 22nd anniversary of its first outlet here, executives at Seattle headquarters at first demurred. But once it was explained to them that Starbucks lovers here had coined the moniker by combining "byeol," which means "star," and "dabang" or a coffee shop, they warmed to the idea.

    The merchandise is so popular that it leads to some absurdity. Last summer, one customer bought the 300 cups of coffee he needed for an armful of limited-edition merchandise but never drank the coffee. This summer, Starbucks limited the number of drink tokens that could be exchanged for merch to 20 per person.

    Of course the man had only snapped up the merch because it sells on marketplaces for second-hand products for an even higher price.

    This screenshot shows Starbucks merchandise for sale on mobile app Daangn Market.

    Starbucks stores are also markers of neighborhood gentrification and notable attractions in real-estate adverts. "Living in a neighborhood with a Starbucks nearby means you're in a tony neighborhood," one builder said. "And buildings with a Starbucks fetch a premium when sold."

    Korea is Starbucks' fifth-largest market after the U.S., China, Canada and Japan. When the coronavirus pandemic erupted, Starbucks' sales in the U.S. dropped 12 percent and global sales 19 percent, but Korea bucked the trend and sales here totaled W1.93 trillion last year (US$1=W1,128).

    Although many outlets here curtailed operating hours or closed temporarily, sales increased three percent on-year, and in the first quarter of this year they jumped 15 percent to W522.7 billion.

    Shinsegae Department Store, whose superstore unit E-Mart owns 50 percent of Starbucks Korea, wants to acquire the entire stake. Its online retail unit SSG.com and the group's baseball team have joined hands with Starbucks to release baseball-themed merchandise.

    One retail insider said, "Starbucks headquarters will still be able to make profits through royalty payments and from product supply even if it sells the remaining stake."

    Han Sang-lin, a professor at Hanyang University, tried to explain the brand's popularity here. "Starbucks' unique culture blended into its brand image appears to have prompted consumers in Korea to consider it somehow special," he said. "Although not as expensive as luxury goods, limited-edition Starbucks goods have become affordable status symbols that young people can boast about on social media."

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