Japan, traditionally a tea-consuming nation and home of the green tea might not naturally be considered a coffee-loving nation. But coffee is not only more popular in both volume and value terms, overall tea sales are continuing to lose ground to coffee, with volume sales exhibiting consecutive decline between 1997 and 2002.

As the third largest importer of coffee, Japan is also the seventh largest coffee retail market in the world, snapping at the heels of more traditional coffee lovers like the Italians. Japan has seen the number of coffee shops rising in recent years. Different types of coffee shops have also been developing rapidly. Apart from the no-frills local coffee shops, chain coffee operators from America and Europe are filtering into urban areas at a fast pace.

Starbucks has played a key role in shaping coffee demand through both on-trade and indirectly off-trade channels also. The company’s new coffee concept and espresso culture has been effectively capturing Japanese consumers’ imagination since the late 1990s: Japan is the company’s first and best performing overseas market outside North America and the number of outlets there is expected to reach 500 in 2004.

Females are Japan’s main coffee consumers and many have learned about the variety of fresh coffee from their experience with Starbucks. Indeed, the desire to repeat the ‘real’ coffee experience at home has helped boost retail sales of coffee and coffee accessories over the past few years, with the trend expected to continue.

There the Italian coffee machine manufacturer De'Longhi took the chance by entering the market already in 1993. "For De'Longhi to become a lifestyle brand in Japan, we were faced with the task of securing appropriate space that would allow us to show the full range of products as well as the brand philosophy. It soon became clear to us that it would be far better to include a restaurant & café operation, as this would give us the opportunity to provide a perfect venue to show the products in operation in a real kitchen."

The concept worked so far and in February 2006 De'Longhi in cooperation with Shinsei Bank opened up yet another totally new concept store by combining the coffee experience with integrated online banking terminals.

Although instant coffee still accounts for the bulk of sales in the coffee market, fresh coffee has been the main driver of coffee sales as a whole. The boom in sales was further fuelled by Japanese manufacturers launching new products, as well as repackaged existing brands, especially in the fresh ground coffee category that tapped into this trend for authentic coffee. One very exciting new product seems to be Starbucks Matcha Latte which combined Japanese traditional affection for green tea with the Starbucks concept.

The growing number of speciality coffee retail outlets also helped spur this growth. Fresh ground coffee saw the fastest growth (around 4%) in both volume and value terms in the coffee market during the period 1997-2002. It is evident that a more sophisticated consumer base of coffee drinkers is currently migrating from instant coffee to fresh ground coffee. They wish to emulate in the home what they are served in chained coffee shops.

Fresh ground coffee brands have proved popular, as they provide a high quality cup of coffee without the need for a grinder in the home, given that most Japanese live in small-sized accommodation. Fresh ground coffee would appear to have struck the optimum balance between authenticity and flavour against ease of preparation.

Another very famous type is canned liquid coffee which is already brewed and ready to drink. It is available in supermarkets, convenience stores and vending machines. The latter one offering heated cans in the autumn and winter, and cold cans in the warm months. There are numerous types of canned coffee. Very common is milk coffee, which includes milk and is generally quite sweet. Black coffee is also popular, as are low sugar and cafe au lait, Georgia has offered American-style flavoured coffees such as hazelnut, but those are rarely seen, suggesting that Japanese coffee drinkers are more keen on traditional tastes.