In the face of soaring coffee bean prices and an unfavorable won-dollar exchange rate, low-cost coffee brands in South Korea are turning to star marketing to revitalize their brand image and maintain market presence. The traditional competitive edge of offering value-for-money coffee is no longer sufficient in the current economic climate, prompting brands to invest heavily in celebrity endorsements.
The Shift to Star-Driven Campaigns
The industry is witnessing a strategic pivot as brands like Mammoth Coffee Lab, Mega MGC Coffee, Compose Coffee, and The Venti enlist major stars to enhance their appeal. Mammoth Coffee Lab recently announced actor Kim Woo-bin as its exclusive model, aiming to align his trustworthy image with the brand’s identity. Despite a 14% increase in sales to 75.7 billion won last year, Mammoth Coffee Lab’s operating profit declined by 24% to 2.6 billion won, underscoring the need for a refreshed marketing approach.
Mega MGC Coffee, after featuring soccer star Son Heung-min, saw its franchise count soar from 2,173 to 3,551, with operating profits surpassing 100 billion won. Similarly, Compose Coffee’s partnership with BTS member V resulted in franchise growth from 1,901 to 2,812 and a 9% increase in operating profit, reaching 40 billion won.
The Cost of Celebrity Endorsements
While the strategy of employing high-profile celebrities is proving effective in increasing brand awareness and sales, it comes with significant financial implications. Advertising fees for stars like Son Heung-min and V reportedly reach around 6 billion won annually. Mega MGC Coffee shares half of these costs with its franchise owners, while Compose Coffee requires them to cover 20% of the expenses. Such cost-sharing practices have sparked criticism over the financial burden placed on franchisees and consumers.
Navigating Economic Headwinds
Industry experts highlight that as inflation and exchange rates continue to rise, low-cost coffee brands face inevitable price hikes. Professor Jeong Yeon-seung from Dankook University emphasizes that star marketing plays a crucial role in positively shaping consumer perceptions amid economic stagnation. The strategy is seen as a necessary shift from cost-cutting measures that have reached their limits.
However, critics argue that focusing solely on celebrity appeal without enhancing product quality may not be sustainable. Lee Eun-hee, a consumer studies professor at Inha University, points out that the costs of celebrity endorsements are ultimately transferred to franchise owners and consumers, necessitating a balance between marketing and product enhancement.
The Broader Trend
The trend of celebrity-driven marketing extends beyond low-cost coffee brands. Mid-priced brand Idia has also joined the bandwagon, leveraging actor Byeon Woo-seok’s rising popularity for its rebranding efforts. This move reflects a broader industry consensus that survival depends on more than just pricing strategies.
In conclusion, while star marketing is reshaping the competitive landscape for low-cost coffee brands, it also raises questions about long-term sustainability and the impact on consumers and franchisees. As brands navigate these challenges, the focus will likely remain on striking a balance between compelling marketing campaigns and maintaining product quality.
Note: This article is inspired by content from https://biz.chosun.com/en/en-retail/2025/04/27/AHTX4NVA2BGUTOELTT6D5STWKM/. It has been rephrased for originality. Images are credited to the original source.