BEIJING — For Zhang Yalin, an auditor at an accounting company in Guomao, Beijing’s upmarket central business district, grabbing a latte from a cafe in her office building marks the start of her work day.
Zhang is one of a growing number of Chinese who have started to habitually consume the caffeinated beverage, and they are helping make the nation’s market for the drink the fastest-growing in the world.
Although most Chinese associate coffee with Western lifestyles, they are increasingly warming to it, especially in large cities like Beijing, Shanghai and Guangzhou, capital of Guangdong province. Coffee consumption in the country rose from 26,000 metric tons in 2006 to 128,000 tons in 2016.
Wu Jiahang, who has worked in the industry for more than 20 years, said that two decades ago most Chinese did not appreciate just how delicious coffee is.
“When I arrived in China for the first time in 2000, I brought coffee from Colombia as a gift, and people thought it had gone bad due to the sour taste,” said Wu, who was born and raised in the South American country.
When he was appointed chief representative of the Colombian Coffee Growers’ Federation for Greater China to promote coffee beans from his country, Wu said many Colombians, especially coffee growers, initially did not believe that their beans could be sold to China.
But within years, more coffee-growing countries began to sell their beans to the country, lining up to secure a slice of the market where the growing middle class was seeking its caffeine fix.
Esther Lau, an analyst with market research company Mintel, said, “A coffee culture has been developing in China.” She believes that the country’s massive and rapid urbanisation, along with a growing number of Chinese travelling overseas, are the factors behind coffee’s rapidly expanding popularity.
Chinese coffee consumption has nearly tripled in the past four years, and the potential for the drink is enormous.
An International Coffee Organization report released last year said Chinese coffee imports grew by 16 percent year-on-year in 2017, compared with about 2 percent in the United States, the world’s largest coffee consumer.
Wu, using Colombian coffee as an example, said annual output was less than 400 tons 12 years ago, but is expected to exceed 2,000 tons this year.
But with freshness the key, Colombia is not China’s first choice for coffee beans. According to a report by the international trade statistics database UN Comtrade, the top three coffee exporters to the country are Vietnam, Malaysia and Indonesia.
Strong demand
Vietnam is the world’s largest exporter of robusta coffee, a sturdy variety of bean with low acidity and a high degree of bitterness.
Nguyen Thi Thu Hang, a senior adviser from Vietnam on export evaluation and capacity building for small and medium-sized enterprises, said high-end coffee shops in general mainly buy arabica beans. However, robusta beans, which are the most cultivated in Vietnam, are cheaper and often used to produce powder for instant coffee.
Vietnamese coffee beans account for 35 percent of those imported by China, which Hang said is down to persistent strong demand for instant coffee, particularly among office workers who are pushed for time.
The country’s fast-expanding middle class has become used to buying and drinking latte, cappuccino and other forms of the drink in coffee shops. Demand, especially for hot, fresh coffee is rising, with consumption growing by about 22 percent in 2014. This expansion led to many leading coffee shop companies opening more stores in China.
Lau said, “The Western lifestyle is attractive to upper-and middle-class urban consumers.”
The main outlets in China are Starbucks, Costa Coffee and McDonald’s, with smaller companies occupying 25 percent of the market. In Shanghai there are now more than 6,500 coffee shops.
Starbucks, which opened its first shop in China in 1999, is the market leader, with a 31.5 percent share in 2013. When Howard Schultz, its CEO, visited the country in 2016, he said the company would open 500 new stores annually by 2021. This will double the number of its outlets in China to 5,000.
Costa Coffee, a British multinational, plans to open 900 more stores in China by 2020, which will give it 1,344 shops in the country.
Esteban Liang, managing director of Costa Coffee in Asia, said, “To be seen in a coffee shop is a way for people to express themselves and to say who they are … the products they consume, the food they buy, the coffee they drink.”
As coffee is still a relatively new departure for China’s tea-drinking population, sweet milky forms of the drink such as latte and mocha are the most popular.
To cater to Chinese tastes, international coffee chains have adapted their menus to include more blended and tea-based drinks. The specials on offer at Starbucks include a green tea java chip frappuccino along with green-tea-flavoured cake.
In large cities such as Shanghai and Beijing, where drinking coffee has been popular for a number of years, independent businesses are also appearing.
But Dave Seminsky, who own a coffee shop in Shanghai’s Jing’an district, said it will not cater to individual customers’ preferences. “We’re staying ‘true to coffee’, but I don’t have bags of sugar and lots of milk hanging around,” he said.
Seminsky said that getting customers to change their habits has been one of the biggest challenges, but that by roasting its own beans his business aims to offer a “premium experience”. He added that part of the price of a cup of coffee includes “the experience of going into the store, and we’re trying to differentiate from the big companies”.
The boom in independent coffee shops such as Seminsky’s underscores the demand for more high-end coffee. With China’s move toward a consumer-driven economy, customers are searching for a greater diversity of beverages.
Igor Carneiro, head of trade and investment promotion at the Brazilian embassy in Beijing, said his country is targeting the high-end Chinese market and hopes to export a coffee-drinking culture to it along with related products.
“Drinking coffee is inherent in Brazilian culture,” he said, adding that Brazil is trying to target China’s growing number of high-end consumers because many coffee growers in the South American country believe a smaller market often comes with higher value.
Even though Brazil supplies nearly 30 percent of coffee beans globally, it ranks 35th in terms of exporting them to China. Carneiro believes this is because Brazilian coffee lacks branding recognition among Chinese. To tackle this, a campaign titled “Brazil, the coffee nation” is being launched.
“A growing number of Chinese now prefer freshly ground coffee. Some even prefer specific coffee beans produced by certain countries. We are facing a prosperous and rapidly growing coffee market in China,” Carneiro said.
“By promoting coffee we are actually promoting a lifestyle that is both relaxing and energetic,” he said, adding that even though Brazilian coffee beans are relatively expensive, as most of the cost involves transportation, he remains confident about the Chinese market.
Ideal opportunity
Lau, the market research analyst, said a high price is considered a sign of quality in China. “The more expensive the better－there is still this concept in China, and many coffee dealers know this. They want to brand themselves as premium chains, and that is why their prices are slightly higher in China.”
Last month, Brazil was one of the countries represented at the first-ever China International Import Expo in Shanghai, which attracted more than 300,000 visitors.
The expo featured coffee traders, producers, beans, machines, imports and exports. Wu, from Colombia, who was among the exhibitors, said he is constantly striving to bring his country’s coffee to Chinese consumers.
“From high-end products to ordinary ones, coffee has been witness to China’s reform and opening-up, and the expo has been an ideal opportunity to ensure that more Chinese coffee drinkers know about our coffee,” Wu said.
However, he added that from time to time Colombian coffee producers are concerned about transporting coffee beans by sea because of the cost and time involved, and are not entirely familiar with Chinese consumers’ preferences.
“They are worried about whether their prices are competitive compared with coffee beans from other countries, or whether their products will interest Chinese dealers. But I always tell them the key to winning the market is to focus on the acceptance of Chinese consumers,” Wu said.