Coffee chains are crowding into Singapore in hopes of boosting their global expansion –

Group of friends in a restaurant

Santiago Nunez | Klaud9 | Getty Images

According to a CNBC review, Singapore was Luckin’s first major foray outside of China, opening 30 stores since March. Kenangan Coffee has opened four stores since its launch in September, while Tim Hortons has two locations and Fore Coffee and Louisa Coffee have one location each.

“We have great ambitions for our international expansion. We believe Singapore and Malaysia are just a stepping stone. And we want to expand to many more countries than we do today,” Edward Tirtanata, co-founder and CEO of Kopi Kenangan, a leading takeaway coffee chain in Indonesia, told CNBC.

Founded in 2017, Kopi Kenangan operates more than 800 stores in 45 cities in Indonesia and 22 stores across Malaysia.

The brand, known in Singapore as Kenangan Coffee, has opened branches at Changi Airport Terminal 2, Jewel Changi Airport Shopping Mall, as well as Raffles City Shopping Center and Takashimaya Shopping Center – all locations that typically offer upscale brands and goods.

“There is no better country than Singapore to accelerate our global expansion plan. Why? Singapore is definitely a center of Southeast Asia.” [People] “Planes from all over Southeast Asia fly to Singapore, just for transit, travel or business,” said Tirtanata from Kopi Kenangan.

“Therefore, we believe that with a successful entry into Singapore we can further advance our brand as we expand into more and more countries.”

Singapore’s importance as a global financial center has attracted coffee brands to the country.

“It’s one of those things when you have a restaurant chain that you want to open in New York City, in London,” said Peng T. Ong, co-founder and managing partner of Monk’s Hill Ventures.

“I think they are here in Singapore because we are a financial hub. And they want their future investors to know about us,” Ong said.

“It gives them, especially those funded by venture capital, very good visibility to international investors,” said Jianggan Li, founder and CEO of technology research firm Momentum Works.

Luckin Coffee declined to comment, saying the company was “still a beginner” in the overseas market. This year it overtook Starbucks as the largest coffee chain in China.

A Starbucks spokesperson told CNBC: “We welcome competition because it expands the coffee market and accelerates the adoption and vacancy of coffee consumption.”

Singaporeans of all ages, genders and income levels love coffee. A survey conducted in Singapore in July 2022 found that almost 55% of respondents said they had purchased coffee in the week prior to the survey.

According to a study by Euromonitor International, the wider Asia-Pacific region has the lowest per capita consumption of coffee in the world. The report also noted that coffee consumption is slowly increasing as the dominant instant coffee category matures.

The world’s largest coffee chains such as Starbucks and Dunkin’ Donuts are already well established in Singapore.

According to their websites, Starbucks has more than 140 stores in Singapore, while The Coffee Bean & Tea Leaf has more than 70 stores and homegrown chain Huggs has 20.

There is also a lot of local competition. Singapore’s Housing and Development Authority said in May that there were 776 cafes in residential areas or neighborhood shops.

Many international coffee chains are opening locations in upscale shopping centers and commercial areas. Their prices also tend to be higher than local options.

A cup of cold brew coffee from Starbucks costs around 6.30 Singapore dollars ($4.73). According to CEIC data, a cup of black coffee costs an average of 1.20 Singapore dollars at a local cafe.

Starbucks is considered lower quality in Singapore, according to data from Momentum Works that took into account the cost of living and disposable income in major global cities. This gives Singapore “a broader base for international brands.”

“If you sell coffee for SG$4 or SG$5, I don’t think people will have problems paying that amount of money,” said Li of Momentum Works.

“The question is, how big do you want to be in Singapore? But I think everyone knows that you can’t get too big in Singapore, but having Singapore as a market is relatively easy to operate,” Li said.

According to the Economist Intelligence Unit’s rankings for the second quarter of 2023, Singapore has maintained its lead as the best business environment in the world over the next five years, thanks to factors such as economic and political stability.