The Grand Narrative

This isn’t my best weekend: I work Saturdays already, and on my only day off tomorrow I have the 3 hour advanced TOPIK test at 9am, which I’m soooo regretting shelling 35,000won out for, and then 3 more hours of the intermediate one in the afternoon. On top of that Typhoon Nari is going to make commuting today and tomorrow lots of fun, but on the plus side it means that if I can’t enjoy my limited weekend, then at least other people can’t too.

But I ’ve been needing some light relief from all the hard study I’ve been thinking about doing for the tests, and damnit, the low birthrate is interesting but sometimes the blog needs wine, women and song, yes? I’ve got plently of the latter two on the blog, but unfortunately I detest wine, so let me present this nice easy article about coffee instead. Actually KoreaBeat sent it to me, thinking I’d be interested in translating it, and it is indeed a subject very dear to my bowels heart. He would have translated it himself - after all, it’s easy enough for even me to do - but it’s not technically Korea-related so it would be a bit out of place on his blog. I have no such restrictions, but having said that it inspired me to investigate the Korean angle a bit further, for I’d read somewhere that Starbuckses in Korea are the most expensive in the world. I’ll present the fruits of my research after the translation.

But first, as I’m doing a lot of translations these days, I should point out (if you haven’t figured it out already) that, unlike the Korean songs I did a while ago, I don’t literally translate the articles word for word; they would sound very strange if I did. I do try hard to get the gist of them though, and so add some extra information sometimes if I think it’s useful and doesn’t detract from the point, but I don’t think that in so doing I’ve ever misconstrued them to the extent that the original authors would have any issues with my translation. If you think I ever have made a big mistake though, please let me know: I’m always happy for people to help me improve my Korean.

But not all the mistakes will be mine: the title of this article claims that McDonalds coffee tastes better then Starbucks for instance, but latter it says that consumers rated them equally. Which is it? This sort of thing has been cropping up again and in the articles I translate, and it’s just doing wonders for my opinions of Korean journalistic standards. On the plus side though, if Korean newspapers are like this, then I no longer judge Korean DVD English subtitle writers quite so harshly!

맥도날드 커피 스타벅스에 도전장 [조선일보 2007-09-13 03:22]

美컨슈머 리포트 “맥도날드가 더 맛나” 스타벅스는 올들어 주가 24%나 떨어져

미국 노스캐롤라이나 주민 찰스 루퍼트(Ruppert·55)는 흰색 초콜릿 라테(latte·밀크커피)를 마시고 싶을 때면 동네의 맥도날드 레스토랑을 찾는다. 미국 커피점의 대명사인 스타벅스가 바로 옆에 있지만 맥도날드의 커피가 더 맛있고 값도 싸기 때문이다. 그는 “맥도날드야말로 최고의 커피”라며 엄지손가락을 치켜세운다.

세계 최대 레스토랑 체인인 맥도날드와 세계 최대 커피 전문 체인점인 스타벅스가 커피 싸움을 벌이고 있다. 맥도날드가 스타벅스의 커피 아성에 도전하는 형태다.

맥도날드는 지난해 본격적으로 커피를 판매하기 시작한 이후 현재 1만3800개의 미국 내 점포 가운데 3분의 2에 라테와 카푸치노·아이스커피 등 고급 커피 제품을 판매하고 있다. 화이트 초콜릿 라테의 경우 맥도날드가 한 잔에 3.31달러(3110원)를 받는 데 반해 스타벅스 제품은 4.48달러(약 4211원)로 훨씬 비싸다. 하지만 맛은 맥도날드도 만만치 않다.

미국 소비자 연맹이 발행하는 컨슈머 리포트는 두 회사의 커피 맛을 비교하면서 낸 종합 평점에서 맥도날드 커피가 스타벅스나 버거킹·던킨도너츠보다 낫다고 평가했다. 월스트리트의 평가도 일반 소비자의 평가와 그리 다르지 않다.

투자은행인 UBS는 맥도날드의 장래성을 높이 평가, 내년 주가가 올해보다 18% 가량 오를 것으로 예상했다. 실제 지난 8월 중 맥도날드의 매출은 전년보다 8.1%나 증가했다. 이에 반해 스타벅스는 올 들어 주가가 24% 떨어졌으며, 개장한 지 13개월이 넘는 매장의 매출 증가율도 지난 5년 사이 가장 낮은 수준에 그쳤다.

[김기훈 특파원 khkim@chosun.com]

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McDonalds Coffee Challenging Starbucks? [Choson Ilbo 13/09/2007  3:22 AM]

Not only has Starbucks’ share price fallen as much as 24% this year, but a recent American consumer report finds that McDonald’s coffee taste’s better than that of Starbucks.

The coffee preferences of Mr Ruppert (55), a redisent of North Carolina, are increasingly typical: when he wants a white chocolate latte, he finds a McDonalds in his local area. There is a branch of the representative American coffee chain Starbucks directly next to him, but he prefers McDonalds’ coffee because it tastes better and is cheaper. He says “McDonalds Coffee is indeed the very best,” and gives it the thumbs up.

McDonald’s, the biggest restuarant chain in the world, has begun to compete with Starbucks, the biggest coffee chain in the world. It intends to directly challenge Starbucks’ fortress-like position in the coffee market.

Last year, McDonalds began a big campaign of selling more upmarket coffee from its stores, and now 2 in 3 of its 13,800 American branches sell Lattes, Cappuccinos, and Iced Coffee. In the case of a white chocolate latte, one cup costs $3.31 (3110 won), whereas the same costs $4.48 (4211 won) at Starbucks - much more expensive.

The American National Consumers League’s report compared the coffees of the two companies and found that both were superior to those of Burger King and Dunkin Donuts. But passerbys on Wall Street and those in normal locations rated McDonalds and Starbucks coffee equally.

The investment bank USB rates McDonalds futures highly, and expects its stock prices to rise by roughly 18% from last year. Already, the stock price this August was up as much as 8.1% from the same time last year. Meanwhile, the Starbucks stock price has fallen 24% in recent months, and in the 13 months since McDonalds started selling upmarket coffee Starbucks’ growth rate has been reduced to its lowest level in 5 years. 

Like KoreaBeat pointed out to me, this article has the feel of something directly translated from English, which is what made it so easy. Actually, it seemed very familiar, so I think I may have even read the original English article, or at least something very similar, but if I did then that makes this news months old…it may have been a slooow day at the Choson Ilbo.

It only took a whole 5 mins of searching to find more than enough information about Starbucks in Korea on the internet - considering I drink a bag of the stuff every week, I’m suprised I wasn’t more interested in finding out more about it earlier. First, for more information than you could ever need to know about ordering a coffee at a Korean branch of Starbucks, check this wiki on it out. It’s part of the much bigger Galbijim site, which at first doesn’t look very appealing to a grizzled old-timer like me, but I should plug it because after 3 months of it being up, finally a whole person clicked on the link to my blog from there. Seriously though, it really does look packed with information, and easily the only site a newbie to Korea would ever need - I would even check it out more myself if I wasn’t so busy.

That first wiki did point me in the direction of a comparison, sort-of, of Starbucks prices around the world. As it’s a little old, then it is no longer freely available online, so I realised that my Economist subscription would be of use in making it see the light of day again. As always, I was in an ethical dilemma about reproducing it for a good second or so, but it’s not like I’m making any money off this blog, so here you go:

The Starbucks index

Burgers or beans?

Jan 15th 2004
From The Economist print edition

A new theory is percolating through the foreign-exchange markets

STARBUCKS was due to open its first coffee shop in France on January 16th-a brave step, given that Paris invented café culture. Some of the French press are frothing at the mouth at the notion that Americans think they can make coffee. Jean-Paul Sartre, they scoff, would hardly have found the same inspiration slurping from a paper cup as sipping black coffee in Les Deux Magots. The Economist, however, has been pondering a more existential idea: what can the price of Starbucks coffee-now served in as many as 32 countries-tell us about exchange rates?

Readers may be familiar with The Economist’s long-running Big Mac index: by comparing burger prices around the world, it offers a light-hearted guide to whether currencies are at their “correct” level against the dollar. Given the dollar’s recent plunge against the euro and growing complaints that China is unfairly holding down its currency, we cannot resist testing whether a Starbucks “tall latte index” reaches the same conclusions as our Big Mac index. Both are based on the theory of purchasing-power parity (PPP). This says that, in the long run, exchange rates should move towards levels that equalise the prices of a basket of goods and services in different countries-ie, a dollar should buy the same everywhere.

By coincidence, the average price of a Starbucks tall latte in America is the same as the average price of a Big Mac, $2.80. By dividing the local currency price in each country by the dollar price we can calculate dollar PPPs. Comparing these with actual exchange rates is one test of whether a currency is undervalued or overvalued.

Our tall-latte index tells broadly the same story as the Big Mac index for most main currencies (see table; see article). Economic trouble is surely brewing in Europe: the euro (based on the average price of €2.93-$3.70-in member countries where Starbucks operates) is about 30% overvalued against the dollar. Sterling is 17% too strong. By both measures, the Swiss franc is the world’s most overvalued currency. The Canadian, Australian and New Zealand dollars are still undervalued against the dollar despite their recent climb.

Where the two measures differ is in Asia. The burger index says the yen is 12% undervalued against the dollar; on the coffee standard, however, it is 13% overvalued. More startling is the Chinese yuan: it is 56% undervalued according to the Big Mac, but spot on its dollar PPP according to our Starbucks index. If so, American manufacturers have no grounds to complain about the yuan. The pricing differences probably reflect different competition in the markets for the two products.

Many readers will find burgernomics and lattenomics hard to swallow. Both are flawed as measures of PPP, because they are distorted by differences in the cost of non-tradables such as rents. Yet they are surely a more fun way to understand exchange rates than textbooks. Many readers ask why we don’t we use the price of The Economist around the globe. Unlike the Big Mac or a tall latte, The Economist is not produced locally in lots of countries, so distribution accounts for a large chunk of its cost. Burgers and coffee are therefore likelier to give some clues about currencies.

In hindsight, my own image of Korean Starbucks coffee being so expensive is a result of me being so long here, as I still compare it to the prices of coffee back in NZ of seven years ago that I have stuck in my head. But while Korean coffee may not be at all expensive internationally, the prices are still unbelievable compared to the cost of living in Korea. You can eat very healthily and always have a full stomach in Korea on perhaps 15,000 won a day at most for example, and that’s for a relatively sporty guy like me, but my oh-so-decadent Grande Vanilla Soy Latte costs over 5000 won, more than many people’s dinners. Also, the minumum wage in Korea is 3500 won an hour (something I’ll be blogging much more about soon), and so I’ve always found it ironic that if I worked in Starbucks for an hour here I’d still not be able to afford anything other than an Americano; by comparison, friends in NZ when I was a University student in the mid-90s who did work in Starbucks could have had 4 or 5 Americanos after working there for an hour.

Despite the high prices, Starbucks is very popular in Korea, I think for the same reasons it became popular in the US: the heinous quality of the alternatives…god, my stomach turns just thinking about them. There are pretty much two alternatives to Starbucks: first, one consequence of almost all Koreans getting by on 5 hours sleep a night (if they’re lucky) is an entire nation either puffing away on dirt cheap cigarettes every 5 mins (the men anyway), consuming cheaper and much more healthy nicotine drinks from pharmacies, or swigging even cheaper instant coffee from vending machines. These vending machines are not the shiny techno ones that sell canned or bottled coffee (like the one above), which only started becoming available in Korea a couple of years ago, but huge monoliths that look like they’re 20 years old, and they’re absolutely everywhere: you’ll think I’m exaggerating if you’re not here, but they’ll probably be the first thing you see once you leave the vicinity of the new gleaming Incheon airport.

(Update: I found a pic, and of a relatively new model too!)

Sure, I admit I’m prejudiced: I’m allergic to milk. Nevertheless, I do concede that even the burnt remains of spilt coffee scraped off the hotplate of my perculator would just about be edible if they were mixed with hot water and enough milk-flavored sugar, which I think is a fair description of the gunk that comes out of those vending machines. But still, considering they’re everywhere, then all Koreans will have seen the insides of one as it was getting refilled at some point; to me, still drinking from them after such a traumatic experience is akin to eating the cheapest hamburger patty you can find after personally killing, skinning, and gutting a cow, selling most of the good meat, throwing the intestines and the meat that nobody would buy into a grinder, watching the resulting brown sludge being colored pink, and finally packaging it into said hamburger patty boxes. Why yes, drinking black coffee once from a Korean vending machine when I was young and naive has literally left me feeling very very bitter about the experience. How did you guess?

So I’m not that into vending machine coffee. The only other alternatives are traditional Korean coffee and/or tea-houses called 다방/Da-bang, which I do suggest that you visit at least once because they teach you how God-awful boring Korea must have been in the ’70s and ’80s when people weren’t fighting for democracy. Seriously, even a complete geek like Mark Clifford, who probably doesn’t have very high standards for what he considers a real rave, says somewhere in his 1998 book Troubled Tiger: Businessmen, Bureaucrats, and Generals in South Korea words to the effect that a Saturday night in Seoul in the 1980s was one of the most boring prospects in the world. Indeed, back then, going to a tiny coffee shop and paying through the nose for two cups of instant coffee was the way to impress a date.

These days, many of these coffee shops are wierd, always dusty, full of plastic flowers and dead trees that have been spray-painted white and, just like every workplace in Korea that has the low coffee tables with green felt underneath and a glass top, all of them seem to have exactly the same wire-frame seats…I think when one owner decides to close down he or she coordinates with a place down the road that is remodelling. True, there are more up-market Da-bang these days of course, less dusty and with flashier seats, but somehow they manage to induce in me such a depressing melancholic feeling that I feel like I’m trapped in some purgatory or something. Actually, I think that’s the very core of their business model, for surely the only reason that they can sell instant coffee at 10x the cost of the sludge that comes out of a vending machine (and about 100x of what it can be made it for at home) and still take 15 mins to bring it to customers is because you’re not paying for the coffee per se, but the experience, and this allows you to strech it out. Needless to say, although you still see a lot of these sorts of places in Korean dramas, those 20-somethings who get enough of a daily allowance from their parents wouldn’t be seen dead near the places.

Wait: there’s a third alternative. If you do go into one in the countryside, and it’s not only even darker and dustier than my description led you to believe but you have to wake up the propieter to get a coffee as well, then you’ve probably stumbled into a den of coffee girls. When I first arrived in Jinju in 2000, I saw them on the backs of scooters being driven around by various guys, and what, with their bizarre hairstyles, then my first impression of Korea was seriously that it looked like Grease on acid. Many of these girls are prostitutes for sure (see this movie review that the pic above is from for a good intro to the coffee girl phenomenon), but some really do just deliver their instant coffee, sit around and chat with the customer, pack up the thermos and cups, call their scooter guy to pick them up…and then bugger off.

The guys at my gym in Jinju used to call one everyday after lunch, and probably still are now, 5 years later. They were friendly enough I guess, but I’ve never really seen the appeal of having one come over, and not just because I’m not into the stick-insect, inch-thick of make-up coffee-girl type that is the Korean ideal: again, why pay so much for something that you could make much more cheaply and easily yourself? Same reason again: they’re not really paying for coffee per se…but I still can’t think of anything sadder than having to pay a woman to hang out with you for 20 minutes.

Jeez, another sleep-deprived 3000 word rant post, I should go to bed. But in the meantime, viva la Starbucks and its clones, yes? At least if you’re in Korea, and not just because of the nice toilets, or that its still the only damn place in Korea I can get soy milk in my coffee!

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