Zus Coffee plans to open nearly 200 new stores in Southeast Asia by 2025, including 107 in Malaysia, 80 in the Philippines, six in Singapore, and its first locations in Thailand and Indonesia.

The coffee chain recently surpassed Starbucks as Malaysia’s largest coffee operator, with 743 stores compared to Starbucks’ 320 locations.

Starbucks’ market presence in Malaysia has been affected by recent boycotts related to geopolitical tensions, which have impacted the earnings of its local operator.

Founded as a kiosk in 2019, Zus Coffee reported a threefold increase in net income to 37 million ringgit (US$8.4 million) in 2024.

Approximately 70% of its sales come from online orders through deliveries and pickups, enabled by a technology-driven business model.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Starbucks’ rapid decline reflects geopolitical impact on consumer brands

ZUS Coffee’s overtaking of Starbucks in Malaysia happened amid extraordinary circumstances for the global coffee giant.

Berjaya Food, Starbucks’ Malaysian operator, reported a 46% revenue drop to $55.6 million and losses of approximately $15.1 million in just six months of 2024 due to boycotts related to perceived Israel ties amid the Gaza conflict 1.

The American chain closed over 100 outlets during this period, reducing its Malaysian footprint from 408 stores to the current 320 2.

This demonstrates how quickly consumer sentiment can shift based on geopolitical issues, creating market openings for local brands without international political associations.

ZUS Coffee’s timing allowed it to capture market share during Starbucks’ contraction in what was previously a stable market.

2️⃣ Localization strategy drives Southeast Asian coffee expansion

ZUS Coffee’s emphasis on “tailor-made flavors” for each market reflects a sophisticated understanding of regional preferences across highly diverse Southeast Asian consumer tastes.

The company’s adaptation of palm sugar-flavored drinks in Malaysia and purple yam-flavored coffee in the Philippines shows how they’re leveraging distinctive local ingredients instead of pushing standardized global offerings.