WASHINGTON, Oct. 10 (UPI) -- Green tea may be the traditional hot beverage of Japan, but it may be losing ground to global brewers Starbucks if the company's debut on the Japanese stock market is any gauge for its future success.
The Seattle-based coffee shop took Nasdaq Japan, the country's up-and-coming stock market, by storm Wednesday. Starbucks shares ended its first day of trading 25 percent above its initial public offering price of 64,000 yen.
The Starbucks initial public offering was eagerly awaited by Japanese and overseas investors as a well-known brand enjoying a loyal following worldwide. In fact, investors can buy one share at a time, so even individuals with small accounts can buy into the latte-makers.
To be sure, Starbucks has captivated the younger generation in urban areas. Getting a seat at a Starbucks in the trendy Shibuya area is nearly impossible, and youngsters crowd the store steps, each nursing a custom-made latte at U.S. prices of $3 or so for a brew.
Some investors, however, are wary of the coffee king's success in its early days on the Japanese stock market actually being sustainable.
Since launching its first shop in Tokyo in 1996, Starbucks has gone on to establish 291 stores nationwide. The company expects the number to reach 400 within the next three years. As it did in the United States, the company has brought lattes and macchiatos into the mainstream culture, but Starbucks' success has also enticed others to enter the coffee market.
Doutor, Japan's home-grown coffee chain, has expanded in recent years to establish over 1,000 stores nationwide. It has also revamped its menu to offer similar drinks to Starbucks, from the cafe mochas to the double espressos.
Meanwhile, Tully's, Seattle's other major coffee chain, has also entered the Japanese market. Admittedly, Tully's has only 36 stores, but it too will be launching an IPO within the next few weeks.
Competition in an already tight market will only increase, which is likely to hit on Starbucks' initial gains.
The allure of Starbucks coffee and its image of Seattle hip may be global, at least among those in their 20s and 30s, but whether it can continue to satisfy its investors as much as its latte-drinkers remains to be seen. As the Japanese and indeed the global economy continues to slow down still further, whether coffee lovers are willing to cough up nearly the price of a sandwich lunch could be Starbucks' biggest challenge.
