CJ Logistics

- Korea ranks 3rd place in coffee market size being worth KRW 15 trillion and CJ Logistics is responsible for the logistics of four coffee companies out of the top five, including Starbucks, A Twosome Place, and The Coffee Bean & Tea Leaf.
- CJ Logistics offers the overall logistics service necessary to run coffee shops equipped with cutting-edge technology, making it the No. 1 logistics company in the coffee market, outstripping rivals by a huge margin.
- CJ Logistics boasts logistics centers dedicated to the coffee business and a tightly knit logistics network that enables the franchise industry to improve operational efficiency and quality control.



Starbucks released Oat Green Tea Latte with a four-leaf clover on top in 2018. It was a smash hit, selling over 1.2 million cups in just two months after its launch. A farm in Cheongju, Chungcheongbuk-do supplied four-leaf clovers exclusively. They were fresh enough for it to be placed on top of a drink. What made it possible for Starbucks to supply each and every four-leaf clover to more than 1,200 stores across the country was the cold-chain system of a professional logistics company.

According to an announcement from the Korea Customs Service and the coffee industry on May 25, the size of the coffee market is expected to grow to KRW 15 trillion this year. This makes Korea the third largest coffee market in the world following the US and China. The rise of the coffee market in Korea is marked by exponential growth, so much so that some people are now calling the country the republic of coffee.

The Korean coffee market is divided into specialty stores and retail stores. Considering that the size of the retail coffee market, such as mixed coffee, has remained in the KRW 2 trillion range for years, specialty coffee shops are leading the overall market growth. Last year, there were approximately 95,000 specialty coffee shops in Korea, outpacing the number of convenient stores (54,000).

The surge of specialty coffee shops is in parallel with the advancement of logistics. In the early days, coffee franchise enterprises dealt with logistics using their own workforce and facilities. However, with the skyrocketing growth in the number of shops, they faced inefficiency as they had to secure additional logistics warehouses and workforce. Outsourcing warehousing and delivery to a third-party logistics company (3PL) is an inevitable choice to improve management efficiency and quality control.

Actually, four coffee franchises out of the top five based on market share, including Starbucks, A Twosome Place, and The Coffee Bean & Tea Leaf, are relying on the expert coffee logistics service of CJ Logistics. While coffee franchises are facing a daunting logistics challenge as business thrives and becomes specialized, CJ Logistics is becoming a key player in resolving the issue with its massive logistics infrastructure and consulting capabilities.

Coffee logistics has a high barrier to entry because it is more complex than conventional logistics due to cold chain and inventory disposal practices that are aimed at maintaining the quality of coffee by refrigerating and freezing it. It also calls for a major investment in building logistics centers and an in-house delivery system.

Besides storing and delivering coffee beans at their freshest state, CJ Logistics also provides the comprehensive logistics service necessary in each coffee shop. So, frontline shops can enjoy a higher level of service than they could manage on their own. CJ Logistics' nationwide logistics network and logistics centers are the secret behind the success of the system.

CJ Logistics secured logistics centers to maintain the freshness of coffee beans and timeliness to bolster its national logistics network. Starbucks Southern Regional Center, the largest coffee logistics center in the country recently built within the Busan Global Industrial Logistics Complex, is a part of the effort. Thanks to this, Starbucks can now reduce the pressure of having to create their own infrastructure by using CJ Logistics' logistics system and delivery network. Each Starbucks shop can also make small orders as needed.

Logistics centers run by CJ Logistics handle over 80% of the logistics process, from packing and sorting of products ordered by shops to loading them on delivery trucks, through automated equipment. The company has introduced robotic depalletizers that pick up loaded boxes and move them to a conveyer belt and a piece assorting system (PAS) that sorts products by shop in its logistics centers. They are astonishingly faster and more accurate than human workers. This eliminates the inspection and resorting process that stores used to undergo and reduces the delivery time from 90 minutes to just 10 minutes.


▶ Boxes carrying products that are placed inside as they move along the automated equipment at the CJ Logistics center.

Inventory management is a huge challenge in coffee logistics as many different types of coffee are handled in the sector. To do this, CJ Logistics turned all delivery processes into data. Because CJ Logistics handles both product inventory and delivery, it can connect and analyze in-store data and logistics data, which used to be managed separately. Based on this information, CJ Logistics plans to provide a logistics consulting service based on the numerous items of logistics data and their automation technology.

CJ Logistics is benefiting from the customer lock-in effect thanks to their overwhelming competitiveness in logistics. It is the No. 1 company in the domestic coffee logistics market, outrunning competitors by a wide margin. This generates huge anticipation for greater performance led by the expansion of the coffee market.

Kim Kwon-woong, Head of W&D at CJ Logistics, said, “We have developed the market seeing the potential for growth since the 2010s where there wasn't even a concept of coffee logistics. The biggest factor that puts us far ahead the competition is the trust of customers that has accumulated for years with our fast, stable logistics service.”