Expanding Danes Coffee Business in Japan

Denes Coffee
Report
System04104
4/26/2019

Executive Summary
Danes coffee is one of the leading coffee cafés in Australia. Danes Coffee is known
for its coffee flavour and quality. Danes coffee provides different quality of flavours from
different coffee beans. It Danes coffee is known for its speciality coffee and it was awarded
by Australian International Coffee Awards from last two years (2018 and 2019). Now, it is
looking for spreading its business in Japan, which is the most favourite trade partner of
Australia. Japan is Australia’s second-largest trading partner with 7.1 bullion trade volume
between these two countries. Japan is Australia’s second largest export market as well. This
trade relationship shows a great opportunity for Danes Coffee in Japan. Japan government
also provides immense supports to Australian business organisation because of “Austrade
agreement” between these two countries. Although, the tough competition in Japan coffee
market and strict quality control standards is the problem for Danes Coffee. The cultural and
social difference is always an issue for operating business in other countries. This report
provides an analysis of the cultural, environmental, political, and technological environment
of Japan, thus Danes Coffee can launch its business in Japan. This report also helps to
understand the cultural, political, and social differences between these two countries and
helps to understand these factors with the help of various theories and models.

Introduction
Danes coffee is one of the leading coffee house chains in Australia, founded by Paul
Jackson in 1994. According to Danes Coffee, coffee creation is an art and a science as well.
Danes speciality coffee is committed to sourcing, roasting, retailing, and wholesaling quality
coffees and NASAA certified Organic blends. Danes coffee won the “Champion Australian
Roaster” title in 2018 and 2019 from the ‘Australian International Coffee Association’. The
focus of Danes is to provide the world's best coffee flavour to its customers because coffee is
all about the flavour. This also reflects in the mission statement of Danes. The mission of
Dense is to “Give our consumers a choice to define their flavour.” Danes coffee has a good
opportunity to expand its market in Japan because Japan is a growing market for coffee.
Japan is the fourth largest coffee importer in the world. The coffee trends changed in the
country as it is not limited to just a social drink for the Japanese people to drink in a coffee
shop, rather people of Japan think that Coffee is a regular thirst-quenching beverage
(Woodside, Hsu, & Marshall, 2011).
Economic and Financial environmental Analysis
Regional Trading Groups
There are many regional coffee trade centres in Japan that utilise coffee market
growth. L’Occitane Café, Mojo Coffee, Sarutahiko Coffe, Chatei Hatou Kissaten, Omnibus
Coffee Nakameguro etc. are some big names in the regional coffee trade in Japan coffee
market. Apart from this, Starbucks, Doutor Coffee, McDonald Coffee, and Costa-Coffee are
some big international brands that continuously trying to spend their market in Japan.
Especially, Starbucks and Doutor Coffee are the market leaders in Japan Coffee market.
Some coffee shops, which are known as Kissaten in Japan, have been maintained a high-
quality coffee making process. Each coffee store is unique in its coffee making process,
roasting process, and in coffee beans (Hayakawa, Kazami, Wakayama, Oboshi, Tanaka,
Maeda, & Miyabayashi, 2010).
Measuring Market
It is noticeable that Japan is a high-income country, thus people are ready to spend
high proportionate of their income on coffee and other beverage products. The people of
Japan are now spending more money in Café. Japan is generally known for its tea culture

rather than coffee culture. However, from the last few decades, coffee consumption in Japan
is increasing day by day (Mindell, Sadeh, Wiegand, How, & Goh, 2010). Japan is termed as
the third largest country in terms of coffee consumption among coffee importing companies.
In Japan, coffee consumption per capita was 207 cups in 2014, while it was in the USA,
1252, and in South Korea, it was 369 cups. In 2017, 7.74 million 60kg bags of Coffee had
been consumed in Japan, which was 5.1 million in 1990. Japanese people spend 550 Yen to
500 Yen on coffee and it shares a great portion of their daily income (Lyon, Bezaury, &
Mutersbaugh, 2018).
Asian Trading Regional Examples
During the last two decades, the expansion of Asian economies is continuously rising.
Every country gives opportunities to other countries for investment. The APEC trade
agreements allow others to use the Japan coffee market. It is also considered here that
Starbuck and McCafe are some other coffee chains that are already operating in Japan and
spreading the coffee business every day. The Asian country including Japan has some 60
FTAs and 117 negotiations with various countries for economic development. Japan has
made progress from the last few years as it reduces the tariffs and FTA-led regionalism. The
open economic culture of Japan welcomes the new investor like Danes (Goldstein, 2013).
Trade Barriers for Danes in Japan Coffee Market
Japan is a leading coffee importing country but it charges high taxes on roasted and
decaffeinated coffee products. It has been seen that Canada and USA do not levy any import
duties on processed coffee (roasted or soluble), But Japan impose 20% on roasted coffee and
12.3% on soluble coffee products (Pierrot, Giovannucci, & Kasterine, 2010). The heavy tax
on import and sale of Coffee products create major problems for Coffee houses like Danes
coffee. This is a major barrier for a coffee café. Although, according to the GSP (Generalised
System of Preference) every WTO member lowering its tariffs for import from other WTO
member country in form of MFN (Most Favoured Nation). However, Japan still imposed
heavy taxes on coffee import (Paramati, Gupta, & Roca, 2015).