A decent cup of coffee is a delight. Thousands of cups a day is serious business.

Starting out with one shop 10 years ago, Pacific Coffee has grown into a well-known brand with 39 cafes in Hong Kong and three in Singapore. Despite the unmistakable California look of its cafes, Pacific Coffee is a Hong Kong-based company that is competing on an equal footing in this cosmopolitan city with Starbucks and other international operators.

To Thomas Neir, the ex-hi-tech executive from San Francisco who founded Pacific Coffee, this is just the beginning. "In this business, we have to grow and grow," he says.

In an interview with China Daily, Neir says that his next target is the mainland. Thanks to the increase in mainland visitors, Pacific Coffee has now become a recognized brand in many mainland cities, Neir says. "We are talking to various potential partners on opening cafes in the population centres," including Beijing, Shanghai, Guangzhou and Shenzhen, he says.

On the mainland market, Pacific Coffee would undoubtedly run into some stiff competition. Seattle-based Starbucks is already well established in Beijing, Shanghai and Shenzhen. But Neir remains unfazed. "Starbucks has helped popularize the coffee culture in many mainland cities," he says. "That would be helpful for us as newcomers as we helped them by popularizing coffee in Hong Kong in the past decade," Neir says.

When Neir arrived in Hong Kong then, his one big complaint was the difficulty in finding a decent cup of coffee in the many cafes and restaurants. That was not surprising considering the fact that in those days, coffee was served with highly-sweetened condensed milk in many local eateries and one of the most popular drinks for the masses was a cocktail of coffee and tea mixed with milk and sugar.

The way coffee was treated in Hong Kong then must have seemed sacrilegious to someone from San Francisco, where coffee drinking is taken very seriously, indeed. Dissatisfied with the swill that was being served as coffee by many cafes in Hong Kong then, Neir quit his job in the hi-tech business and, with his wife, sallied forth to right the wrongs that were being done to serious coffee drinkers in the financial capital of the East.

That must have seemed like a good business idea, too. After all, Hong Kong was host to a large expatriate community of many different nationalities and a sizeable population of local Chinese who had studied abroad. Having been exposed to the coffee culture of the West, they could be expected to crave the taste of a perfect brew.

The first Pacific Coffee cafe was located in rented shop space in an office building at the fringe of the central business district near the most-expatriate Hong Kong Club and a Western bar favoured by stock brokers as well as punters. As expected, most of its customers were expatriates working in nearby offices.

From the very beginning, Pacific Coffee has identified itself with the American-style coffee house which offers a wide variety of choice. "Our concept is to provide customers with a comfortable place and a lot of choice," Neir says. "What we sell is affordable luxury to the people of Hong Kong," he says. "Nobody is priced out of the market."

Prices of coffee and other drinks start at around HK$20 (US$2.56). That money can buy you a small cappuccino. You can, of course, have a cup of coffee for less than half of that at a typical Hong Kong teahouse. But the ambience is different and the coffee is definitely not the same.

Anyway, the Pacific Coffee strategy seems to have worked. Not only is it opening more cafes, it is opening them in busy shopping malls and high-pedestrian-traffic locations where the rents are high even by New York standards.

Neir keeps the sales and other business figures close to his chest. He declines to even disclose the cost of setting up a typical Pacific Coffee cafe. "We are just a small- to medium-sized company," he says.

His discreetness is common among brand-conscious retailers who are constantly under the threat of imitators. The barrier of entry into the cafe business is low. An initial capital outlay of a few million dollars would be sufficient to open a cafe. And, sure enough, there have been no shortage of imitators. But many of them have failed because they were unable to build up a widely-recognized brand name.

Even with a well-established brand name, business has been tough in the past few years when the economy was mired in a deflationary cycle that has greatly depressed consumer spending. Then came the most unkindest cut of all: the outbreak of the SARS epidemic. "Business simply died," recalls Neir but "we stuck it out, kept all our people and hoped for the best. Luckily, SARS didn't last too long".

Since the end of SARS in June, business has gotten much better and "we are getting bigger", Neir says. Now, rising rents are like a ghost coming back from another age to haunt him. As soon as business begins to pick up again, rents are on the rise, he says. "Your can't blame the landlords, they have their own set of economics to work with," he says. "You just have to work with them."

Neir says that he is disappointed that the government isn't offering him and other small- to medium-sized businesses in Hong Kong any help in gaining entry into the mainland market. "Nobody from the government has ever come to us and ask how it can help us set up our business there," he says.

But he remains confident about his company's business prospects on the mainland. "Twenty years from now, I expect we will be a lot bigger on the mainland than in Hong Kong," he says.

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