McDonald’s Triggers Coffee War

Forget Starbucks and Coffee Bean, says McDonald's. Or at least, that's what the burger giant is punctuating in its latest local ad blitz, which sends one key message to consumers: cheap coffee can be good.

Promoting its new line of cappuccinos, lattes and mochas, the world's largest fast food chain has come out this week directly challenging coffee-shop chain leaders Starbucks, Hollys and Coffee Bean in a bid to steal a piece of the lucrative java market.

South Korea is one of the latest countries to be added to McDonald's McCafe marketing mix, as the golden arches chain has been expanding its cafe-style brand in the U.S., Latin America, Europe and Asia since 2003.

McDonald's biggest edge over its well-established rivals is price.

McCafe's Americano, which costs 2,000 won, is 20 to 30 percent less expensive than those from other makers, and McDonald's is making sure consumers know about its value with its aggressive media campaign, airing television commercials and plastering posters featuring the drinks at subway stations and bus stops.

The ads take a direct aim at Starbucks and Coffee Bean, saying, ``Forget the star and the bean.''

``Our bottom line is that just because a coffee is expensive doesn't mean it's good,'' said McDonald's spokeswoman Kim Ju-young, who explained that the burger chain's coffee is made from Italy's Lavazza beans.

Despite the bold move, competitors are quick to downplay McDonald's threat.

``We're the No. 1 market player by a clear lead, so McDonald's new campaign doesn't faze us much ― even though their coffee costs less than ours,'' said Joyce Park, marketing head of Starbucks Korea. The cheapest java drink at Starbucks costs 2,800 won.

Industry data shows that U.S. coffee powerhouse Starbucks has 33 percent of the domestic coffee shop market share, followed by Hollys with 19 percent, Coffee Bean 14 percent and Angel-in-us with 12 percent.

Park added Starbucks patrons come for a specific experience and culture that no other brand can offer. The world's biggest java chain, which currently has 270 outlets in Korea, plans to roll out about 40 to 50 more this year.

A spokeswoman of Hollys Coffee, a homegrown brand, declined to comment on the McDonald's challenge but implied that there is a place for everyone in the market. Hollys, with 183 shops nationwide, is aiming to run 236 by the end of the year.

The burger-and-fries company's shot at the specialty beverage market shows how attractive the business is, says Lee Dong-hoon, a researcher at Samsung Economic Research Institute, who highlighted the industry's strong margins.

McDonald's Korea currently runs 235 shops nationwide but did not disclose how many more stores will open this year. McCafe coffee bars will be installed at all outlets, it says.

McDonald's coffe is not only cheap but it also tastes good. For me, it beats Starbucks coffee. I have been drinking Starbucks coffee for a long time and the price of a cup is really extravagant.

McDonald's coffee is really the best!