January 2, 2024
BEIJING – Domestic companies, overseas players increase purchasing volumes from province due to high-quality produce
Coffee brands, both local and global, are increasingly favoring premium coffee beans from Southwest China’s Yunnan province, which has grabbed the unique opportunity to further expand its business in the post-COVID-19 era.
The high altitudes and subtropical climate of Yunnan, which has the largest coffee plantation area in China, are ideal for growing high-quality beans.
As a major producer of Arabica coffee beans, it is seeking to meet demand for new consumption scenarios and develop more premium beans.
Coffee beans of the province have found favor among emerging domestic coffee chains such as Luckin Coffee, Seesaw and M Stand, besides catching the attention of industry players overseas.
In 2022, Yunnan’s total coffee bean output was 113,600 metric tons, more than eight times higher than that of Hainan province, the second-largest beans producing area in China, said the Ministry of Agriculture and Rural Affairs.
In 2022, Yunnan exported beans to 43 countries and regions, with a volume of 8,700 tons to Germany topping the list.
This was followed by the Netherlands, Vietnam, Belgium, South Korea and Thailand, according to the General Administration of Customs.
“International coffee industry players that are doing business in China have been increasingly raising the proportion of beans planted in Yunnan in their total usage, as local purchases are more convenient,” said Li Xiaobo, chairman of the Coffee Association of Yunnan.
Jin Tao, a 42-year-old coffee grower in Menglian, a county in Yunnan, said he renovated and upgraded his coffee plantation in 2022, and planted some new varieties of beans.
The coffee production volume rose by 20 kilograms per hectare, and the quality of beans significantly increased, meeting the standard of premium beans, he said.
“Last year has been a good one for coffee production. The yield of beans is expected to grow further, and the quality is quite good. We have netted a higher income,” Jin said.
Besides his coffee plantation, 345 other coffee growers have joined his cooperative. He has also set up a bean processing factory. An important part of his work is to serve coffee bean fans from various parts of the country.
In 2022, he invested 7.2 million yuan ($1.01 million) in upgrading the technology of the processing factory.
The revamp helped reduce demand for workers, and raised the rate of premium beans from 15 percent to 80 percent.
Despite the price of beans being 2 yuan higher per kg than the market average, his long-term clients, such as global food and beverage company Nestle and domestic coffee chain Manner, have increased their purchasing volumes.
“After the revamp, the beans have been in a stable quality and the damage rate has been low, which has attracted the attention of more customers,” Jin said.
“Before, it required 5 tons of water to process 1 ton of beans; now, it only requires about 50 kg of water to process the same weight of beans. The processing has become more environmentally friendly,” he added.
Chen Danqi, a coffee bean seeker, established a cooperative for farmers in Menglian three years ago. He uses his knowledge and experience to help local farmers improve technologies and management.
“As a bean seeker, I visited many renowned coffee bean producing areas globally, such as those in Panama, Colombia and Guatemala. In fact, the natural environment of Yunnan is similar to those areas, but the technology, planting scale and people’s recognition of coffee in Yunnan lags behind relatively,” Chen said.
The local government of Menglian said the county has set up a group of coffee bean plantations with high yields, and their total area exceeds 3,350 hectares.
Menglian will further focus on continuing to raise the premium rate of beans and cultivate new varieties. It also aims to build an industrial park that combines modern planting, initial and deep processing, research and development, and tasting. This is expected to help promote the reputation of local beans to the rest of the country and the world.
Meanwhile, more international players are seeking cooperation with the local coffee industry in Yunnan.
Timor-Leste Coffee Association said it reached some cooperation agreements with the coffee association of Baoshan, Yunnan.
The local coffee sector in Baoshan is quite advanced, and Timor-Leste would like to learn and cooperate to raise the quality of beans produced in the country, said Evangelino Monterio Soares, president of the Timor-Leste Coffee Association, who attended an industry conference in Baoshan in November.
He said the production technologies are relatively inferior in Timor-Leste, and that the income of local farmers is low.
The association plans to learn from Baoshan and guide local farmers in the country to improve the quality of beans and raise their revenues.
China is the seventh-largest coffee consumer in the world, with consumption volume reaching 288,000 tons in 2022.
The top three consumers are the European Union, the United States and Brazil, according to the US Department of Agriculture.
In first and second-tier Chinese cities, the average per capita coffee consumption volume of office employees has reached about 300 cups annually, approaching the level of some mature markets.
This is significantly higher than the overall average on the Chinese mainland, which stands at nine cups a year, according to a research report by consultancy Deloitte.
Fueled by increasing demand, more coffee chains have opened outlets in small Chinese cities, and coffee consumption volume has jumped in third and fourth-tier cities as well.
Sales revenue of 2023 from the coffee sector in China is expected to reach 617.8 billion yuan. By 2025, sales revenue is likely to exceed 1 trillion yuan, according to consultancy iiMedia Research.
“The main consumer groups of coffee in China are mainly aged between 25 and 35, and they have indicated a high level of trust in local products. This is crucial for the rapid development of local brands in China, and the domestic coffee market is expected to continue its growth momentum,” said Zhang Yi, chief analyst of iiMedia Research.