Interesting tidbits while we’re still on the subject of the coffee trade, and especially its rise in Asia which has all kind of global macro bells going off in my head (or is that just a caffeine high?)

This article from Business Daily (BD) Africa is dated roughly a year ago, but still seems highly apropos given my last post on the expected rise in both global demand for coffee, and also the contract prices of coffee futures. Highlighted points include:

  • China, famous for its ancient tea traditions, is following the rapid development already seen in Japan. An old tea-drinking nation, China’s rich neighbor has become the world’s third biggest importer of coffee in just 40 years.
  • China’s consumption–estimated at between 30,000 and 40,000 tons for the mainland–is still less than a tenth of the demand in Japan, according to the International Coffee Organization. However, coffee consumption is growing by 10-15% per year, a rate of growth surpassed only by Russia.
  • Coffee shops are popping up across China. The biggest chain, Taiwan’s UBC, now has around 1,100 stores on the mainland, including 300 that opened last year. Second is Starbucks, which has more than 250 stores in mainland China and predicts that the nation will become its second biggest market outside of North America.
  • Despite coffee’s increased market share, African coffee growers have a fairly low presence in China. As of summer 2007, Uganda was the only African coffee producer with its own distribution chain. Yet all coffee growing nations desperately need to boost their exports to China to help adjust the trade imbalance.
  • Two factors may explain African coffee’s lack of market share: one is marketing, or the lack thereof, especially when compared with South American and specifically Colombian brands; the second is the cheapness and competitiveness of the Chinese marketplace. “China is still a cheap market,” says Ji Ming, director of the China Coffee Association, and higher quality, higher priced beans from say, Kenya or Ethiopia, may not seem so attractive, especially when compared with Vietnamese or Ugandan grown robusta.
  • However, most analysts are convinced that a combination of both local distribution and better promotion could help African arabica growers garner more market share. “We’re confident that with a little more promotion our exports will really increase,” claims Melaku Legesse, head of trade at the Ethiopian embassy in Beijing. “The big brands are now starting to influence Chinese buyers on quality issues and our name is getting better known.”
  • African arabica growers, however, will have to compete with the domestic Yunnan Arabica, which supplies all of the beans for the China-based Nescafe factory that opened in 1992. Roasters in Europe and Japan are increasingly buying Chinese Arabica too. And roasters within China are buying more local coffee in order to avoid the high tariffs on imported product.
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