China wakes up to coffee

Related tags Coffee Drink

As China slowly starts to wake up to the smell of coffee, we
consider whether or not it will ever prove to be a rival for the
nations favourite soft drink, tea. Simon Pitman reports.

Trying to establish a market for coffee in the motherland of tea is a challenge, to say that least, but that is exactly what many leading coffee companies have continued to do in the space of the last few years.

Recently all the big names in coffee, including Nestle, Sarah Lee, Proctor & Gamble and Kraft, have all made a concerted effort to push popular instant coffee brands in the China market. But likewise, there has also been a move towards speciality and luxury coffee brands.

German speciality coffee company Kaffeeverkäufe increased it sales in China by 90 per cent in the space of the last 5 years, reaching exports of 6,500 tonnes in 2003. And according to projected growth figures from research group Euromonitor​, the company is looking for a further climb of 70 per cent to reach 11,000 tonnes in the course of the next five years.

With China's population now touches 1.3 billion people, current demographic and economic growth figures suggest that the annual rate of coffee consumption is set to rise from 1 cup to 2. Although this rate still pales when compared to US citizens, who consume an average of three cups a day, it is the sheer volume of the market and the current rate of growth that has coffee companies rushing to make their mark.

Today coffee drinking is a passion that many young urban professionals wish to cultivate in China because of its associations with sophisticated western life styles. Many of those taking up on the burgeoning coffee culture are both expats and Chinese nationals who have returned from stints studying and working abroad.

Indeed in cities such as Beijing, Shanghai and Guangzhou global coffee chains like Starbucks are helping to give a high profile boost to coffee's image by providing stylish and comfortable surrounds from where many of these individuals can enjoy the habit they acquired overseas. This group of people is likely to go to visit such cafés in the morning, where a light breakfast is also often taken.

But it is still instant coffee that dominates the small coffee market in China. Itseasy preparation is the main advantage for time-pressured business people. On the other hand, bean coffee is comparatively expensive, so with the majority of Chinese coffee drinkers still appreciatingthe taste of the soluble products, fresh-ground coffee is still a tiny part of the market.

In fact its not only coffee consumption that is on the rise in the country, coffee production is also starting to take off rapicly. According to the US ministry ofagriculture, approximately 13,000 tons of coffee in China were harvested in the year 2001, compared to just 3,600 tonnes in 1997, and with investment in the sector continuing apace, industry experts say that producers are racing to keep up with domestic demand.

What now remains to be seen is whether China's coffee consumption will turn out to be more than just a passing trend and perhaps go on to become a stalwart of the country's soft drinking culture. Undoubtedly with tea drinking being so deep-rooted in China's culture, coffee companies are faced with an immense challenge in trying to conquer the market.

However, with market growth continuing apace from its small base, experts have reason to beleive that in two to three decades the drink will become an integral part of the country's daily life.

Related topics Markets Tea & coffee

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