STiR coffee and tea magazine

34 STiR coffee and tea / Issue 2, 2020 (April / May) Roast and Ground Coffee Imports (2019) Source: China Customs Top 10 Trading Partners Kilos Bags (60-kilo) Malaysia 5,630,020 93,834 Italy 1,876,964 31,283 US 1,500,707 25,012 UK 506,455 8,441 Switzerland 479,351 7,989 Vietnam 348,168 5,803 Japan 323,365 5,389 China free zone 313,633 5,227 Germany 180,571 3,009 Taiwan Jinma Customs Territory 179,711 2,995 Green Coffee Exports (2018-19) Source: China Customs Top 10 Trading Partners Kilos Bags (60-kilo) Germany 23,071,040 384,517 United States 8,271,640 137,861 Belgium 7,930,403 132,174 UK 2,669,220 44,487 Russia (CIS) 2,335,200 38,920 Saudi Arabia 2,044,900 34,082 France 2,029,800 33,830 Spain 2,001,000 33,350 Sweden 1,951,800 32,530 Switzerland 1,449,000 24,150 its 4,000 locations, suffering a reported $430 million in losses. Starbucks c.e.o. Kevin Johnson told investors the experience "created a model we are now using around the world, and we know that model worked." During the crisis, Starbucks guaranteed to pay hourly work- ers who were forced to stay home after contact with custom- ers or with co-workers suffering from the virus. Johnson said the team in China "elevated cleaning protocols for stores" and doubled-down on carryout, drive-thru, and delivery. During the company's annual meeting, he announced Starbucks China would build a $130 million coffee innovation park consisting of a roastery, warehouse, and distribution center in support of a planned expansion to 6,000 stores by 2022. Instant coffee remains the largest coffee segment in China, accounting for $8.3 billion in sales, according to market research firm Statista. The number of coffee shops in China has increased by 52,000 since 2017, and there is evidence that coffee drinkers are becoming more habitual as they shift from afternoon to en- joying a morning brew, market research firm JingData. Specialty coffee is more often served black and priced from $4.25-5.70 (RMB30-40). According to JingData sales of take- away coffee increased by 60% between 2017 and 2018. Nearly 70% percent of past-day coffee drinkers report their coffee of choice was instant, down from 90% in 2010. However, most customers accustomed to less bitter, low-cost soluble coffee, are unwilling to pay more than $2.85-4.25 (RMB20-30) per cup, writes JingData. Americanos, espresso coffee, and coffee that is taken black are growing in popularity in the offline, take-away coffee seg- ment. Consumers also have more choices online including basic coffee types such as cappuccino and latte along with various flavors such as hazelnut, according to JingData. "The process of cold-brewed coffee has gradually been mentioned by consum- ers. Iced Americano and iced drip coffee are consumer's first choice for summer," according to JingData. Online coffee Lucy Fu Jingya, standing vice-chairperson and secretary-general of the China Coffee Association (CCA), writes that "online pen- etration of specialty coffee has continued to increase. Online sales make up for the lack of offline stores in low-tier cities, al- though the first and second-tier cities are still the main consum- er groups of specialty coffee. Sales volume in 2018 increased by 153% compared to 2017." "The developed coastal areas of the south are the main provinces for online coffee consumption," writes Fu. "Shanghai has enjoyed a fantastic rise with 7,000+ stores, Beijing is sec- ond. Chengdu, Chongqing, and Hangzhou have also seen huge increases," she said. According to Fu, "post-90s and post-95s consumers are the main force driving online coffee consump- tion. Among them, consumption by the post-95s accounts for a significant increase. Women accounted for more than 60% of online sales at growth rates significantly higher than men." Fu cited a consumer survey of 6,765 coffee drinkers in 2018 by the Coffee Salon that found 53% of Chinese coffee drinkers are female and 47% male. The most likely coffee drinkers are aged 26-35 (46%), followed by those 19-25 (33%). Consump- tion tapers to 18% for those 36-50 years of age. Cohorts under 18 and over 50 years of age each account for less than 2%. Chinese Green Coffee Imports (2019) Top 10 Trading Partners Kilos Bags (60-kilo) Vietnam 21,253,607 354,227 Brazil 8,500,081 141,668 Colombia 5,525,138 92,086 Ethiopia 4,976,690 82,945 Guatemala 3,637,643 60,627 Indonesia 3,194,810 53,246 Uganda 1,755,487 29,258 El Salvador 541,496 9,025 Papua New Guinea 537,362 8,956 Costa Rica 270,647 4,511 Source: China Customs In 2010 economists tasked with improving the quality of living in China's rural provinces predicted five-fold growth from 40,000 to 200,000 metric tons of quality arabica by 2015. Government incen- tives, state-funded grants, and training programs for family farmers followed, quickly boosting yields. A joint venture with Starbucks in 2012 led to the construction of several dry mills. Production increased to 141,352 metric tons on 125,000 hectares by 2015, earning growers $472 million (CNY3.25 bil- lion), mostly from green coffee exports to Germany and the US. Sales of roast and soluble coffee increased eight-fold. Since then, the harvest has increased to 200,000 metric tons, but coffee growers complain the effort has not resulted in wealth or global acclaim. One-two punch The next sign of trouble was in January when arabica prices that had hovered around $1.20 per pound fell to $0.98 on the ICE futures ex- change. March contracts for May delivery are priced at $1.03 per poun- dand remain in a trough.

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