Coffee faces competition from other beverages
As in the U.S., coffee, while rising in popularity, faces competition from other beverages in Japan. Bottled water, mineral water, energy drinks and a variety of teas are also becoming more popular. Most coffee service companies carry these products.
Another popular product in Japan is chilled coffee, which can be found in vending machines, convenience stores and supermarkets.
Starbucks recently launched a ready-to-drink chilled coffee called Discoveries. According to a publication called Japan Today, Starbucks and Suntory co-developed the ready-to-drink chilled coffee that comes in two flavors, latte and espresso.
Vending is more pervasive in japan
Japanese OCS operators face far more competition from vending than their U.S. counterparts, given the much higher number of vending machines in relation to the population. Vending has long been a more popular retail format among Japanese consumers, and coffee is no exception.
In Japan, beverage machines in particular are more pervasive than in the U.S. Beverage machines vending both cold and hot drinks can be found on most streets. Most have a section for hot beverages, offering a variety of coffee and other hot drinks in 2-ml. cans for about 110 yen, or $1.00 in U.S. currency.
Cup machines, while less common than machines
vending packaged products, are also available in many public locations in Japan. These machines also vend both cold and hot drinks. The hot drinks are also priced around $1.00 per cup.
Enhancing the convenience of vending in Japan is "m-commerce," whereby consumers purchase products using their mobile phones. The purchase is billed to their mobile phone account.
OCS is more consolidated in japan
The refreshment services industry is far more consolidated in Japan than in the U.S. This is not surprising, given the fact that the population is more condensed. Close to a quarter of the country's population lives in the greater Tokyo area.
Unimat Group is the nation's largest coffee service provider. According to some estimates, the company controls more than 40 percent of the nation's OCS business. The company is also involved in the management of coffee shops, restaurants and convenience stores, along with real estate development.
Unimat has expanded into single-cup systems, but only slightly.
Daiohs Corp., based in Tokyo, is one of the largest OCS players in Japan. Daiohs owns First Choice Coffee Services, based in Bakersfield, Calif., one of the largest regional OCS companies in the U.S.
UCC, the largest coffee roaster in Japan, is also a big OCS player. This company has expanded into cartridge-based systems on a small scale.
Aramark is also active in Japan through a subsidiary.
As in the U.S., most of the major vending operations are active in OCS.
Coca-Cola bottlers collectively control the largest number of vending machines in Japan, followed by Kirin Beverage Corp., a Japan-based company. Both Coca-Cola and Kirin have private label can coffee products.
Coca-Cola and Kirin both have sizeable OCS divisions which have expanded into cartridge-based, single-cup systems.
Japanese Customers respond well to single-cup
Coffee service customers visited by Automatic Merchandiser in Japan indicated strong appreciation for cartridge-based, single-cup systems. As in the U.S., consumers appreciate the convenience, the quality and the variety.
Many locations do not have room for vending machines.
Some locations have vending for the employees and OCS for customers.
A cellular phone rental company with 600 employees recently added a cartridge-based, single-cup machine in a break area that also has a glass pot brewer and an airpot brewer, following a trial. The on-site refreshment services coordinator said the single-cup machine is patronized by workers who would otherwise leave the office for coffee.
Because the employees at this location include people from several different countries besides Japan, including the U.S., Europe and Latin America, this manager said the system's variety addresses the employees' disparate preferences.
The most popular flavors are cappuccino and espresso.