was one of tremendous growth for Caffé Luca in Asia. In November, Caffé Luca opened a posh 1,800-square foot location under a franchise agreement with Hanae Mori, Japan’s premier fashion designer, in the ultra-upscale Harajuku section (similar to Rodeo Drive) of Tokyo. A second store is scheduled to open under this agreement in February of 2001 in the Mori Building in Omotesando. Likewise on the fashion front, Caffé Luca is now featured at a kiosk at the world-famous Orizzonti Denim Company in Nagoia.
Also among the year’s accomplishments, Caffé Luca was chosen by a Japan’s 65-store Cinnabon franchise as the gourmet coffee to serve its customers. It has also been selected as the coffee of choice by the Ritz-Carlton, Osaka. In fact, Caffé Luca’s growth in Japan has been so great that the company has contracted with Yoshino Coffee to roast to the exact specifications of Caffé Luca and to service existing Caffé Luca customers in and around Tokyo.
Most recently, Caffé Luca penned a deal with the Uokuni Group, Japan’s most popular foodservice operator, which has been in business since the early 1900s; the company currently operates 1,938 units, employing more than 10,000 people and serving more than 820,000 meals per day. As part of the agreement with Caffé Luca, Uokuni will transform all feasible storefront cafés to Caffé Luca cafés. The first location opened in early December in Osaka. Also under the agreement, Uokuni will: serve Caffé Luca coffees at all of its catering affairs; equip most of its locations with kiosks or carts that will allow customers to self-serve Caffé Luca drip coffees; and distribute Caffé Luca coffees throughout Japan.
Additionally, Caffé Luca has managed to break into the Hong Kong coffee market this past year. In a licensing agreement with Faimark of Vancouver, B.C., and Hong Kong, Luca International, Ltd. is planning to open several coffee shops in Hong Kong - the first two, opening early this year, to be located in the Kingswood Plaza in Tin Shui Wai, Yuen Long and in the Metro Plaza in Kwai Chung. There are currently five Caffé Luca locations operating in Japan with hundreds more in the works, ten in Korea and six planned to open in the immediate future in Hong Kong.
THE COFFEE MARKET IN ASIA
Dema has many insights regarding doing business in Asia, and in Japan in particular. “The Japanese market is very interesting,” says Dema. “You have to take a look at the reason why so many outside companies fail in Japan. The reason is simply because they do not understand how to build lasting relationships with Japanese business people, to cultivate the people they work with.”
Dema says that doing business in Japan is very rewarding, and that one must be in it for the long run. “The Japanese must embrace, respect and trust the people they work with. They are very loyal, and both business and personal relationships take time.” He feels he understands the culture because of the time he has taken, the friends he has made, and the culture’s similarity to the Italian culture. “I find that the best salesman is the best listener, not the best talker,” Dema reflects.
Why have American coffee companies such as Caffé Luca seen so much success in Asia in the past few years? Dema says one reason is that Japanese consumers strongly crave American or Italian-style espresso beverages and drip coffees. The people of Japan and Korea (with China and Hong Kong following suit) have really embraced coffee trends from America and especially those from Seattle, explains Dema. He also says that Asian coffee consumers have a tremendous sweet tooth, and that they enjoy biscotti, muffins, brioche, pastries and coffee-flavored chocolates along with their beverages. Nearly 50% of all beverages sold in the spring and summer months are iced coffees and granitas, says Dema. Flavored lattes are also rising in popularity - hazelnut is the biggest seller, with Amaretto, vanilla, almond, caramel and Irish cream also making their mark. The biggest seller, however, is a straight-shot of espresso.
CAFFÉ LUCA’S FUTURE
What’s in store for John Dema and the ever-expanding Caffé Luca? “I would like to see slow but steady growth, to maybe three or four times the company’s current size,” says Dema. Why not more? “Once you get too big you lose your touch, you lose the quality time spent with customers and employees, and you lose attention to detail, which is what got you where you are today,” he explains.
Dema does not necessarily want his company to be a household name. He does not want to be available everywhere. He simply wants to continue to sell the highest quality coffee at a reasonable price, to pass savings on to his customers and never to sacrifice quality under market pressure. “I do not want to be like any other coffee company. I would really like to be known as the ‘Neiman Marcus’ of the coffee industry because quality sells now that people truly know the difference,” he says. “I [also believe in keeping] Caffé Luca a family business, in staying relatively small and in treating my employees and customers well.”
“There is one thing I know,” says Dema. “You must have integrity in order to succeed.”
Kate LaPoint is owner of To The Point Business Imaging, a company specializing in marketing, public relations, writing and editing for companies in the specialty coffee industry. She can be reached at (206) 418-9958 or by email at email@example.com.