Highlands Coffee

SWOT ANALYSIS FOR

HIGHLANDSS COFFEE
WHEN JOIN KOREAN
MARKET
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TABLE OF CONTENTS
INTRODUCTION_________________________________________________3
I. Introduction______________________________________________________________3
II. Company_______________________________________________________________3

1. Highlands Coffee_______________________________________________________3
2. History of company______________________________________________________4
3. Mission, vision, core value________________________________________________4

EPSC ANALYSIS_________________________________________________6
I. Economic_______________________________________________________________6

1. Information____________________________________________________________6
2. Analysis______________________________________________________________8

II. Political_________________________________________________________________8

1. Information____________________________________________________________8
2. Analysis______________________________________________________________9

III. Social________________________________________________________________10

1. Information___________________________________________________________10
2. Analysis_____________________________________________________________10

IV. Culture_______________________________________________________________11

1. Information___________________________________________________________11
2. Analysis_____________________________________________________________12

SWOT_________________________________________________________14
CONCLUSION__________________________________________________15
REFERENCES__________________________________________________16
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INTRODUCTION
I. Introduction
To bring a Coffee brand name into foreign markets to operate is a rather difficult problem. We
must first analyze the economic, political, social, and cultural situation of the target market we
are targeting. Specifically in this report, the Korean market and Highlands Coffee are aiming
to expand their business. The coffee shop is a huge market in Korea and is growing day by
day. Different research shows that coffee consumption behavior in Korea has changed
significantly over the past two decades (Kang, Tang & Bosselman 2011; Young 2013). After
analyzing these four main factors we can draw conclusions based on the SWOT model
(Strengths- Weaknesses- Opportunities- Threats). Conclusion that Highlands Coffee has
advantages as well as disadvantages when operating in the Korean market and from that
draw experiences and lessons for them.

II. Company
1. Highlands Coffee

Highlands Coffee is a Vietnamese coffee

shop chain and producer and distributor
of coffee products, established in Hanoi
by Vietnamese American David Thai in
1998. The founding of the Highlands
Coffee company marked the first time an
Overseas Vietnamese was able to
register a private company within
Vietnam.
As of 2009, the company operated 80
coffee shops in six cities and provinces across Vietnam.  In 2011, Highlands Coffee
purchased the pho chain Phở 24 from Lý Quí Trung for an estimated 20 million USD. The next
year, Highlands sold 50% of its shares to the Philippines multinational chain Jollibee
Worldwide for 25 million USD.
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In March 2012, under a partnership with Philippine Internet café company Digital Paradise,
the first hybrid Highlands/Netopia internet café and coffee shop was opened in the
Philippines.
In April 2016, Highlands Coffee had an event to mark "The Vietnamese coffee brand reached
a target of 100 stores across nationwide".
2. History of company
In the late 1980s and early 1990s, David Thai, the company's founder, witnessed the rise of
the Starbucks coffee chain from a small company in his hometown of Seattle to a
multinational corporation. He later cited this as the inspiration behind the founding of
Highlands Coffee, which first began operation in Hanoi in 1998. The company's initial
registration marked the first time an Overseas Vietnamese was able to register a private
company of any kind in Vietnam. Two years later, in 2000, the company was registered as a
joint stock company, again a first for an Overseas Vietnamese.
At the time of its foundation, Highlands limited itself to producing packaged coffee, to be sold
through supermarkets, hotels, restaurants, and cafés. It was four years later, in
2002, that the first Highlands Coffee’s coffee shop was established, across from Notre-Dame
Cathedral in Ho Chi Minh City. As of 2009, the company operated 80 coffee shops in six cities
and provinces across Vietnam: Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Vung Tau and
Dong Nai.
As of May 2010, the company offered 5 blended roast and ground and whole bean coffees
(Heritage Blend, Traditional Blend, Gourmet Blend, Moka Blend, Culi Supreme), and 4
espressos in ground and whole bean (Full City Roast, Arabica Supreme, a water-process
DeCaf espresso produced at their in-house water process decaffeination facility, and
Cinnamon Roast espresso). The espresso line also included ESE-compatible 45mm
espresso pods packaged in Malaysia. In December 2009 the company introduced a Ready-
To-Drink (RTD) "Iced Coffee" in an 8-ounce can, in two versions, one labeled "with Milk" and
the other labeled "Black". By May 2010 the company stated that the RTD product had been
distributed to more than 17 Asian countries and the USA.
In 2011, Highlands Coffee purchased the pho chain Phở 24 from Lý Quí Trung for an
estimated 20 million USD. The next year, Highlands sold 50% of its shares to Jollibee
Worldwide for 25 million USD.
In March 2012, under a partnership with Philippine Internet café company Digital Paradise,
the first hybrid Highlands/Netopia internet café and coffee shop was opened in the
Philippines.
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Beside traditional coffee products, Highlands coffee researched and developed new products
such as Freeze products in 2014 and Tea-Milk tea products in 2015.
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3. Mission, vision, core value

3.1. Mission
Highlandss Coffee’s mission is to champion deliciously affordable modern Vietnamese coffee
and café lifestyle experience. Everywhere, everyday.

Researching and developing many kinds of products and guests. Chain stories were placed
in trading centers or nice locations in the center of the cities with luxurious style, Highlands
Coffee easily approach many kinds of guests. In the past, Highlands Coffee renowned high
society’s coffee. However, Highlands Coffee develop 3G-generation 3 model, it is take away
style, products are served more faster, convenient. Besides, prices of product were reduced
to accord with demands of many guests.
3.2. Vision
Highlands coffee’s vision is to become Vietnam’s favourite café and coffee… And proudly
share this with the world. As can be seen, Highlands Coffee’s ambition is to champion
Vietnamese coffee brand and develop to the world. Therefore, Highlands Coffee sold a half of
stock to Jollibee to develop the brand to the world, Philippine first. Developing and enlarging
chain story nationally. According to recent research, Highlands Coffee is the brand has been
chosen most.
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3.3. Core value

The majority of Vietnamese knows Highlands Coffee is Vietnamese’s brand. However, it is
not as important as Highland Coffee is recognized as a premium coffee brand. In essence,
Highlands Coffee brand remains a Vietnam for the Vietnamese, but they still attract foreign
guests love coffee and bread as typical Vietnam.
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EPSC ANALYSIS
I. Economic
1. Information
South Korea is one of the most highly regarded countries in the world when it comes to
sustained growth and development. In each of the last five decades, the average annual
rate of growth has exceeded 5% and the economy is now an innovation-driven, high-
income country of just under 49 million people with a total GDP in excess of $1 trillion and
a per capita income of over $20,000 (PPP adjusted).
The economy runs a current account surplus and the budget (fiscal) balance is strong –
South Korean national debt is very low (less than 40% of GDP).
One area of weakness is consumer ratio debt - Korea's household debt to GDP stands at
about 80%.
Coffee is a big deal in South Korea. Despite tea culture in the country dating back over
one thousand years, nowadays coffee in its various forms is sold by a wide range of cafes
and stores and is arguably the most popular drink in Korea.
The average adult over 20 years old consumed around 353 cups of coffee in a year as of
2018, almost one cup a day. Over 2.6 million 60-kilogram bags of coffee were consumed
in Korea in 2019. 
As of 2017, the mega coffee franchises in terms of store numbers were Starbucks, Angel-
in-us, Ediya Coffee, The Coffee Bean & Tea Leaf, Tom N Toms, A Twosome Place, and
Hollys Coffee. Ediya had the most cafes, over 2,400, followed by Starbucks with over
1,300.
Coffee merchants have strived to diversify the origin of coffee beans, enhance their own
roasting skills, and develop coffee machines for households. 
Furthermore, South Koreans are keen to experience new ways of enjoying coffee, which
has been responsible for fads, like nitro cold brew and uniquely blended coffees. It
appears that South Koreans’ taste for coffee remains strong and the cafe industry is
bound to benefit from further innovations in this market.
The number of chain and stand-alone coffee shops in South Korea more than tripled to
about 49,600 in 2015 from 12,400 in 2011. In 2017, there were around 88,500 cafes
nationwide, a 63 percent increase compared to that of 2015. Seoul is estimated to have
exceeded 18,000 coffee shops, an incredible increase from 300 in 1999 and 10,000 in the
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early 2010s. Seoul is home to more outlets of the global coffee chain than any other city in
the world. In fact, Korea’s coffee consumption and number of coffee shops has more than
doubled since 2005.
The size of Korea’s coffee industry has grown more than 2.6 times in 5 years. And along
with the increase of the size, the coffee franchise industry is getter bigger as well.
Among the market dominant players in the recent Korean coffee boom is Starbucks
Coffee Korea. Since its opening in 1999, the company has been operating more than
1,140 stores across 75 cities. It reported sales topping 1 trillion won and profit hitting the
100-billion-won mark in 2016. reporting 2017 profits of 114.4 billion-won. Ediya Co. is the
Korea’s largest coffee shop chain by store numbers, with an estimated 2,071 outlets
nationally. A Twosome Place was the second largest franchised coffee shop chain in 2017
in Korea with over 500 outlets. Other major chains include Angel-in-Us, Caffe Bene, Paris
Baguette, and Tous Les Jours, dal.komm COFFEE, HOLLYS Coffee, Tom N Toms
Coffee, Coffeesmith, Paik’s Coffee. Most recently, seeing promising business in Korea,
Cong Caphe, a successful Vietnamese cafe franchise with more than 50 stores in
Vietnam, has launched its first overseas store in Seoul July 2018.

Although the overall market has grown sharply over the years, per capita consumption of
coffee is far below that of such countries as the United States, Germany and many
European countries. As a result, there is still considerable growth potential in the market.
However, the market is highly competitive due to increased presence of brands and shops
nationwide, requiring competitors to achieve competitive edge in price, taste options and
related services. That only 55.6 percent of coffee shops survive within one year after
establishment, meaning almost a half of new coffee places go out of business, really
matters.
Regarding price, those who have managed to price themselves effectively have enjoyed
enormous success. A good example is McDonald’s as it nearly tripled their sales after
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cutting the price of their coffee from KRW 2,100 down to KRW 1,500 early in 2017.
Besides, in order to compete with big coffee chains, companies should focus on quality
and taste options to meet consumers’ diversified demands. In addition, comfortable design
of coffee shops is necessary for social talks, family meetings and private/group study.
Likewise, eye-catching decoration for bags, cups and shops would be attractive to young
consumers as beauty is atypical part of Korean culture.
2. Analysis
2.1. Strengths:
 Highlands coffee could have lower price than many other coffee brands in Korea.
 It has already been a strong and popular brand in Vietnam.
 The menu has a variety of drinks and includes many kinds of cakes.
2.2. Weaknesses:
 New brand to Korea
 It is hard to find a good place to attract the customers.
 The construction costs a high price.
 We may lack the budget for advertising.
2.3. Opportunities:
 High customer demand.
 Have chances to promote our brand and develop through many Koreans applications.
 Learn more from other coffee shops.
2.4. Threats:
 Hard to compete with other famous coffee brands in Korea.
 The trends are constantly changed.
 Raw material costs are not stable.

II. Political
1. Information
The political situation in Korea has been quite difficult during the covid epidemic. It is not yet
that drastic and strong measures have been taken in the early stages of the epidemic when
covid 19 appeared in many countries around the world before. However, at present, Korea
has very good strategies to prevent the covid 19 epidemic and is one of the countries that
have developed the type of fast covid 19 check in its population. They drew on their
experience and preventive measures against SARS 2003 and MERS 2005.
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Currently, the Korean epidemic situation is under good control, so the Korean people soon
return to their jobs to develop the economy and soon bring Korea back to the position they
had before. covid 19. Thanks to that, their coffee industry has also developed quite a lot after
covid 19 when people were able to enjoy a drink at the store with quite a pleasant space
instead of having to sit with 4 walls. home like before
Demand for coffee increased, leading to Korea becoming an attractive place for both
domestic and foreign coffee investors. and Highlands Coffee is no exception. They saw the
potential because Koreans had a long tradition of drinking coffee. If Japan has shaped the tea
ceremony as a morality, for Koreans their ethic is coffee.
2. Analysis
2.1. Strength:
Highlands Coffee is the largest chain of coffee shops in Vietnam when they use ingredients
from Vietnam. Currently in Korea, Vietnamese coffee is occupying the 2nd position in terms of
coffee import in Korea. In addition to the fact that the main relationship between Vietnam and
Korea is very good, it is obvious that Highlands coffee can take advantage of its strengths in
Korea.
2.2. Weakness:
The influence of covid 19, the political situation of Korea was quite complicated when factions
in this country did not agree on the government's way of responding to a pandemic outbreak,
leading to the situation of economic sectors of this country also went down and the coffee
industry has also affected more or less in this. Highlands Coffee will have to get used to the
constant changes in politics and policies of the Korean government, which is not much
happening in Vietnam.
2.3. Opportunity:
The opportunity for the coffee market in Korea is quite large, when the friendship between
Vietnam and Korea is very good, the Highlands Coffee can penetrate the Korean market and
"favored by the Korean government" is a completely possible thing to happen.
2.4. Threat:
Although the relationship between Vietnam and Korea is very good, the Korean government
always recognizes and wants to promote domestic coffee companies to develop and compete
for coffee brands in the world. This leads to Highlands Coffee being faced with the threat of
price, space, style ... etc.
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III. Social
1. Information
South Korea has a small area but the population is 51,294,665 people (Source:
https://danso.org/han-quoc/) and especially there are many cafes, which has increased
rapidly in recent years. here. There are also the world's largest coffee shops owned by
Pascucci and Starbucks groups. Koreans love to go to cafes, about 50% of people
interviewed say they go to cafes 3-4 times/week. In the 1990s, consumers were mainly
students and young people, so many types of cafes were concentrated around the university
area. The rapid increase in the number of cafes shows both vividly the increasing size of the
business, while also demonstrating the Korean people's love for coffee and the enthusiasm
for creating their own coffee culture.
According to the results of a survey mainly targeting students at George Mason University,
Korea, the percentage of students who drink coffee for energy is 67.2%, accounting for more
than half of the respondents. close. When asked about the frequency of students drinking
coffee, 52.4% of them answered that they drink coffee every day. (According to Gmu Fourth
Estate). The data collection results revealed the demographic structure of potential customers
of coffee shop, especially those located near universities. The majority of the customers are
university students who often go to cafes with various purposes, most of which are to
socialize, to study, and to have a nice cup of coffee.
Another worth-considering social factor is the population or potential customers’
consciousness of the environment. South Korean students are well-known for their
enthusiasm and demand of change. Throughout the country’s history, there have been
various student movements which had great impacts on the nation, and nowadays students
and young people are also leading many movements such as “Escape the corset”,
demanding the demolition of Korean impossible beauty standards, or many student groups
have gone onto the streets to demand the government to have stronger responses to climate
change (Ock 2019).
2. Analysis
2.1. Opportunities
Large market with well frequent customer
As analyzed, the coffee shop market in South Korea is flourishing.To Korean customers,
going to cafes is not simply to grab a cup of coffee or to work or socialize, but it is a symbol, a
lifestyle. Understanding this and being able to take advantage of this would ensure the
success of a new entry.
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Student market
South Korean students are well-known for their enthusiasm and demand of change.
Therefore, it is a good foundation to believe in the potential of a new brand café from
Vietnam, as it could draw the attention of student customers and demand change. Maximizing
the curiosity of this customer target, a business could attract more customers with its unique
concept and values.
2.2. Threats
Coffee shop businesses in Korea are required to be renovative, unique and sensitive to
trends.

IV. Culture
1. Information
In Korea, coffee is something more than just a drink. It’s a big part of Korean people’s
lifestyle. For many office workers, grabbing a cup of coffee during their lunch hour has
become a part of their daily routine. They go to a cafe not only for a drink but to enjoy the
moments of leisure where they sit together for a chat, coffee cup in hand.

In 2014, South Korea had the sixth-most expensive Starbucks among 20 OECD countries.
According to the Korean news site Dong-a Ilbo, a Starbucks americano was $4.85 in Korea,
followed by countries such as France and the UK at $3.51 and $2.67 respectively.
Another point that makes Korea's coffee culture different from other countries is friendly
customer service. If you watch Korean movies or music videos, you can see that there are
many people studying or working in cafes, the shops are also designed with electric sockets
under the table to serve customers. Moreover, there are many coffee shops available 24/24
for students to study overnight.
Korea has its own unique
dining culture. Unlike
America, where coworkers
and friends are usually invited
for a meal at the person’s
house, people in Korea
typically meet outside at
restaurants or cafes. That is
why so many cafes are in
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Korea. In busy neighborhoods like Hongdae or Gangnam, it is found that there are over five
cafes within a 100-meter stroll. The good thing is that each cafe has its own character and
concept. In order to survive in such a competitive coffee market, it’s probably not a choice but
a necessity for a cafe to differentiate its business from the thousands of others in town.
Coffee drinkers have presented a polarization in consumption, from choosing budget options
in convenience stores to exploring specialty flavors in local roasteries. Coffee merchants have
strived to diversify the origin of coffee beans, enhance their own roasting skills, and develop
coffee machines for households. As a reflection of their efforts, a survey conducted in 2016
suggested that coffee and other coffee beverages are together the most loved non-alcoholic
beverages in South Korea, accounting for over a quarter of the respondents.
Furthermore, South Koreans are keen to experience new ways of enjoying coffee, which has
been responsible for fads, like nitro cold brew and uniquely blended coffees. It appears that
South Koreans’ taste for coffee remains strong and the cafe industry is bound to benefit from
further innovations in this market.
Thus, with the long-standing coffee culture in Korea, there are advantages and disadvantages
when Highlands wants to start a business here.
2. Analysis
2.1. Strength:
Good brand positioning advantage. A strong point of Highlands coffee is that this brand has a
clear and consistent positioning from the beginning, with strong image associations of "coffee
for businesspeople" and "coffee for the intellectuals with good income”.
Design reasonable space. Highlands Coffee impresses strongly by its spatial design
combining traditional beauty and modernity. Coming to Highlands, customers always have a
feeling of closeness, daily life but very delicate and luxurious because of open space, full of
light.
High quality cups with high quality plastic cup printers. Plastic cup printer: Used in the printing
process is the leading factor in evaluating the quality of the finished plastic cup. It is
recommended to use imported plastic cup printers to reduce loss in printing. Because at
present, according to information provided by printing companies, an order of 1000 will have
200 damaged items.
Good governance and operation. In any Highland cafe, we can easily see how to optimize the
capacity of each part and the layout is very scientific and intelligent. Customers come to the
counter to order drinks and pay now, saving a lot of time and effort. Service quality is always
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guaranteed and makes good feelings for all customers. This shows that the management and
operation capacity of Highlands Coffee is extremely good.
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2.2. Opportunities:
From those Strengths, Highlands Coffee has opportunities such as: There are not many
coffee stores professional in style and service with affordable price; Coffee culture in Korea is
almost like in Vietnam when coffee is the daily drink of indigenous people. Coffee shops can
appear in every street in Korea, showing a love for coffee here; Opening more coffee shops in
big cities and urban.
2.3. Weakness:
Furthermore, Highlands products are easy to be imitated. For example, smaller local
competitors may develop beverages that are not exactly identical but quite similar to the
company's products. Even the interior design and spaces of the Highlands stores are easy to
reproduce. This business environment has empowered competitors.
2.4. Threats:
Coffee market is now matured and fiercely competitive.
Standards are generalized for most products.
Most building in cities have already had at least one caferia inside, it’s difficult for Highlands
to jump in and replace.
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SWOT
After analyzing as well as finding the strengths and weaknesses from the four factors of
Economic, Political, Social, Culture above, we can summarize a full SWOT table as follows:

Strengths Weaknesses Opportunities Threats

-Good brand -Products are not -There are not many -Coffee market is now
positioning really diverse and cafe stores matured and fiercely
advantage.  need more products professional in style competitive
-Design reasonable for the Korean market and service with  -Most building in
space -Highlands products affordable prices. cities have already
-High quality cups are easy to imitate.  -Coffee culture in had at least one
with high quality -Do not have much Korea is almost like in cafeteria inside, it’s
plastic cup printers experience in Vietnam when coffee is difficult for Highlands
-Good governance developing foreign the daily drink of to jump in and
and operation. markets indigenous people. replace.
- Quick service  -Difference in the Coffee shops can -Many of brand cafes
- Use material coffee taste of Korean coffee appear in every street open should prove
in Vietnam  in Korea, showing a that they are doing
-New style of mixed love for coffee here. well and thus great
culture between the Opening more coffee competitors,
West and the East  shops in big cities and especially to newly
- Consistency in urban. open cafes
Western identical -Large market with well -Coffee shop
decoration and frequent customer businesses in Korea
delivery service  -Student market  are required to be
renovative, unique
and sensitive to trends
-High salary
-Standards are
generalized for most
products.
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CONCLUSION
Based on the information in this report, it can be concluded that Highlands Coffee is having
many chances to develop and get more profit in the Korea market. Since the day this product
launched the market, it has become the most leading Vietnamese coffee product in the Korea
market, and it tends to expand to foreign markets. However, the development of global
integration has been bringing many competitive products into the Korea market. Therefore,
Highlands coffee has to build a specific strategy to make the products better and attract more
customers. This report includes a marketing strategy that is designed as a plan for Highlands
to continue improving and growing strongly in the future. Creating new products with more
flavors and improving product quality is the main strategy for product strategy. Price strategy
is also important, Highlands has to lower the price a bit so that they can compete with the
other competitors and remain their customers. Besides, Highlands needs to expand the
distribution across Korea and some new markets as well. Finally, they have to promote their
sale through promotion activities.
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REFERENCES
N.E.T Co., L., 2021. Văn hóa cà phê Hàn Quốc. [online] 123chienluoc.com. Available at:
<http://123chienluoc.com/thong-tin-chi-tiet/2306/van-hoa-ca-phe-han-quoc> [Accessed 17
March 2021].
Theseus.fi. 2021. [online] Available at:
<https://www.theseus.fi/bitstream/handle/10024/333903/Nong%2c%20Thi%20Nghi
%20Phuong.pdf?sequence=3&isAllowed=y> [Accessed 17 March 2021].
joinakeep, V., 2021. Coffee Culture in South Korea. [online] Culture Shock! Journal. Available
at: <https://cultureshockjournal.wordpress.com/2019/05/31/coffee-culture-in-south-korea/>
[Accessed 17 March 2021].
Theseus.fi. 2021. [online] Available at:
<https://www.theseus.fi/bitstream/handle/10024/333903/Nong%2c%20Thi%20Nghi
%20Phuong.pdf?sequence=3&isAllowed=y> [Accessed 17 March 2021].