Malaysia's Favourite Coffee Brand is in Danger

Summary

This video explores the rise of Zeus Coffee in Malaysia, which has rapidly overtaken Starbucks in store count in just five years. It delves into the evolution of Malaysia’s coffee culture, from the colonial tea-drinking days to the rise of third-wave coffee brands. Zeus Coffee’s success is attributed to its affordability, grab-and-go concept, and localized offerings, capitalizing on Malaysia’s support-local movement. Despite challenges, including competition from international brands like Lin Coffee, Zeus continues to thrive by maintaining operational efficiency, leveraging customer data, and responding to local needs. The future of Malaysia's coffee market remains uncertain with the entry of bigger players.

Takeaways

• 😀 The average Malaysian drinks 2.38 cups of coffee daily, with the coffee industry in Malaysia worth over 1 billion USD.
• 😀 There are over 3,330 local coffee outlets in Malaysia, and one local brand has grown to 600+ stores in just 5 years.
• 😀 Malaysia's coffee culture shifted in three waves: the first with the Hainanese Chinese community, the second with Starbucks in 1998, and the third with local brands like Zeus Coffee.
• 😀 Starbucks in Malaysia is not owned by Starbucks US but is operated by Bajaya Food, a subsidiary of Bajaya Corporation.
• 😀 The boycott of American brands in Malaysia in 2024 due to political tensions led to a 33% revenue decline for Bajaya Food and a drop in Starbucks' market share.
• 😀 Zeus Coffee emerged as the leading coffee brand in Malaysia, surpassing Starbucks in store numbers, with over 600 stores within 5 years.
• 😀 Zeus Coffee's success was driven by competitive pricing, with drinks starting at just 9.90 MYR, and its high-volume, low-cost business model.
• 😀 Zeus Coffee capitalized on the 'Grab and Go' concept, offering super accessible locations and an app that allows for easy ordering and delivery.
• 😀 Despite the COVID-19 pandemic, Zeus grew rapidly, benefiting from changing consumer habits like ordering coffee on-the-go or online.
• 😀 Zeus Coffee expanded quickly by keeping costs low, using compact store setups, and leveraging operational efficiency, allowing them to open stores for only 20% of the cost of a Starbucks outlet.

Q & A

What is the average number of cups of coffee consumed daily by a Malaysian?

The average Malaysian drinks 2.38 cups of coffee a day.

How much is the coffee industry worth in Malaysia?

The coffee industry in Malaysia is worth 1 billion US dollars.

How many local coffee outlets are there in Malaysia?

There are over 3,330 local coffee outlets in Malaysia.

What significant change happened in Malaysia's coffee culture in the late 1800s?

In the late 1800s, the Hainanese Chinese community introduced the iconic Kopitiam culture, which served Nanyang-style coffee with kaya butter toast and half-boiled eggs.

How did Starbucks influence Malaysia's coffee scene in 1998?

In 1998, Starbucks introduced the second wave of coffee culture, turning coffee into an experience with lattes, frappuccinos, and a cafe ambiance, which also became a popular hangout spot.

Who owns Starbucks in Malaysia?

Starbucks Malaysia is owned by Baja Food, a subsidiary of the Baya Corporation, not Starbucks US.

What led to a decline in Starbucks' revenue in Malaysia in 2024?

In 2024, Starbucks Malaysia faced a massive boycott due to perceived links to Israel, leading to a 33% revenue drop and a 40% decline in its share price.

What is the key to Zeus Coffee's rapid growth?

Zeus Coffee's rapid growth is attributed to its competitive pricing, local support movement, grab-and-go concept, and compact store models that require lower startup costs compared to larger cafes like Starbucks.

How does Zeus Coffee manage to keep its costs low?

Zeus Coffee keeps costs low by utilizing a compact store model, bulk purchasing raw materials, optimizing coffee demand forecasting, and relying on internal funds for expansion.

What role does Zeus Coffee's app play in its success?

Zeus Coffee's app plays a significant role by gathering personalized data on customer preferences, allowing the company to predict popular drinks, optimize the menu, and manage demand effectively.