This HWC predication is made on 9th February 2024 for future reference.
Yes while this is a bold prediction, with HWC expecting to have 85 stores in Malaysia by the end of 2024, these are 3 reasons why I think HWC won’t survive in the long run.
1: Pricing In The Middle
Let’s compare the pricing strategy of Starbucks and Zus Coffee.
As of February 2024, Starbucks charge a premium of RM15.90 for their Latte, while Zus Coffee charges RM9.90 as they feel specialty coffee should not be expensive, backed by their tagline of “a Necessity, not a Luxury”.
With two different yet clear pricing model, one at the high end and one at the lower end, customers know what they are getting.
As of February 2024, HWC Coffee is charging RM11.90 for their Latte. By charging in the middle when the taste between HWC and Zus is similar and without the aesthetics of Starbucks, customers would go for Zus if they want to drink speciality coffee and Starbucks when they fancy a nice environment for discussion/work, leaving HWC to be “stucked” in the middle with no clear direction of mass customer acquisition.
The caveat for charging in the middle is if your product quality is better than both the high and low pricing charged by your competitors, something which we will discuss in point 2 below, Quality.
2: Quality of Coffee
After trying HWC for a couple of times, I realised their coffee is pretty standard, nothing that really stands out, which makes it harder for frequent repeat purchase.
On the other hand, I am impressed with Arabica’s coffee quality and they definitely stand out compared to HWC, with similar setup in terms of space
Arabica’s latte is priced at the higher end, but with the quality to back them up.
Click here for my marketing strategy for Arabica, if I am their CMO.
3: Customer Experience and Lifestyle
Unlike coffee bean, starbucks where you can grab a cup of coffee and either:
1: Meet your friends to chill and hangout in a comfortable environment and living that “lifestyle”, HWC’s setting is a little underwhelming to do so with the proximity of the seat
or
2: Another option would be to grab your laptop and live that digital lifestyle of working with just the internet. While we often see this in Starbucks, we rarely see it with HWC due to the design environment.
Without these 2, there are lesser reasons to visit HWC, unless they tweak their pricing strategy and/or improve on product quality.
Conclusion
These are the reasons why I think HWC Coffee will struggle in Malaysia. However, it will be interesting to see if their strategy changes over time as they expand in Malaysia.
I will be happy to be proven wrong should they do well and overtake the existing competitors in Malaysia and gain top market share in the coffee industry.
Thanks for reading and let’s move on to the next prediction!
