Business / Industries

Growing industry that's full of beans

By Xie Yu in Shanghai (China Daily) Updated: 2012-11-26 13:01

Almost all of the international coffee giants consider China as one of the biggest markets for the revitalizing drink.

Seattle-based Starbucks operates more than 650 outlets across 51 Chinese cities and corners the lion's share in the market of specialty coffee shops, according to a Euromonitor research report in 2011. It plans to increase the number of them to 1,500 in the country's more than 70 cities and triple the number of employees to 30,000 by 2015.

Costa Coffee, from the United Kingdom, also has an ambitious plan in China. It intends to have 500 cafes in the country by 2016.

However, considering the size of the population, the market is still in its infancy.

China's coffee demand was about 120,000 tons in 2011. In contrast, Chinese people drank more than 1 million tons of tea over the same period. The Japanese drank about 800,000 tons of coffee in the same year, according to statistics from the Yunnan Coffee Associations. Analysts from Barclays Capital forecast that China's demand for coffee will grow by an average annual rate of nearly 40 percent from 2011 to 2015.

"Although the growth is expected to be stronger than ever, the total amount of coffee drunk in China is still low compared with Europe and the United States and even Japan," said Wang Hai, owner of Paradiso Coffee, a local coffee house chain, who has been studying the coffee industry in China for more than 20 years.

Wang said currently, Chinese people mainly drink instant coffee or coffee-flavored beverages, which does not require good quality coffee beans.

The coffee house business, except for two or three big names, is just "half alive". A Chinese person would drink only two to three cups of coffee a year on average, according to Wang.

It is questionable whether the Chinese market can digest the huge output of the high quality Arabica coffee beans in Yunnan.

What's more, compared with Java coffee or coffee from Ethiopia, Yunnan coffee still lacks taste, he added.

But Liu Minghui, vice-president of the Yunnan Coffee Association, is quite optimistic about the future.

"It (Yunnan coffee) is increasingly competitive," he said.

The best roast Yunnan coffee beans sell at 680 yuan ($109) a kilogram, which is a very high price in the coffee market. But it also sells low-price green beans at 10 yuan a kilogram that are suitable for making coffee beverages.

Pu Na, 26, a Yunnan native, and now also the owner of a small cafe in Shanghai's Jing An Villa, a shikumen-style complex located in the downtown area of the metropolis, is also optimistic.

"More people from the younger generation are coffee fans nowadays. Yunnan beans are excellent. It is popular in my cafe now," she said.

Although per capita coffee drinking is still low in China, industry experts estimate that as more and more people have overseas education experience, or become familiar with Western culture, it will become a common leisure activity and even a daily habit for many urban dwellers.

It is a good opportunity to introduce to them a special kind of coffee bean grown in China, Pu said.

She plans to open a new shop next year and make it a special outlet for selling Yunnan coffee beans.

"I have confidence. Yunnan coffee will have more fans," she said.

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