STiR coffee and tea magazine

52 STiR coffee and tea / Issue 5, 2017 (October / November) By Dan Bolton Unpredictable Outcome Stakeholders expect the rapid expansion of China's retail cafes to continue, but a successful outcome is not certain Very little of the coffee sold in China is ground roast or fresh brew offee went unnoticed for a century after arriving in China in the 1890s. Tea-loving Chinese today still drink less than 2% of the world's coffee, but the eyes of the in- dustry are turned to what may become the most dynamic coffee market on earth. Chinese consumers new to coffee find the aroma of freshly roasted coffee strange and the brew bitter. Noting these concerns, when Nestlé first began operations in 1990 it packaged its Nescafé brand of instant coffee with sugar and powdered creamer. Fol- gers and Maxwell House quickly followed and by 1999, when Starbucks opened its first cafe, there were enough curious locals to build on that success. Chinese consumers still prefer milk-based, sweetened, and flavored brew ― but now they pay top dollar. (See pg 55 China's Contempory Coffee Scene) Due to the pace of coffee shop openings, it is now possible in every major city to order a single-origin, custom roast, pour-over ― the hallmark of third-wave shops. Domestic consumption tripled to 3.2 million 60-kilo bags in China during the past four years, according to a study published in June by the US Department of Agricul- ture (USDA). Imports of roast and ground coffee have increased from 79,000 bags in 2012/13 to an estimated 800,000 bags in 2017 and consumption of instant coffee will top 1.5 million bags. In Yunnan, the arabica harvest is projected at 2.2 million 60-kilo bags for 2017/18. Samuel Eli Gurel, processing expert and instructor at Torch Coffee, says that tea and coffee are in real competition. "Tea is primarily drunk as a beverage while coffee is primarily consumed for some other purpose," he says. Coffee shops are a social scene where young coffee drinkers shoot selfies; and they are a business office away from the office. They are also a place to relax for mothers and a study hall for students, and a familiar stop for tourists. China is embracing the idea of a "third space," perhaps not as readily as the west but "travelers notice the sprouting of locally branded cafes. If a Starbucks store is not available to fulfill the desire for premium coffee… then a local equivalent would be happy to fill its shoes," writes analyst Alt Perspective on the Seek- ing Alpha blog. This explains why the number of cafes grew from a handful to 75,000 during the period 1990-2012 and doubled to 130,000 in the five years that followed. C

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