China coffee production statistics

Coffee Production Statistics in China

In fact, up to the beginning of 2016, the coffee cultivation area in China exceeded 1,2 billion square metres, with a production quantity of 140,000 tons, which covers 1,5% of total World Coffee production.

In recent years, both the production and consumption of coffee in China have been growing at double-digit rates, and show few signs of slowing. It is estimated that China now produces more coffee than Kenya and Tanzania combined, and consumes more than Australia. As the economy of China continues to grow, the pool of consumers with disposable income expands and demand for coffee rises accordingly. The presence of coffee shops is no
longer a novelty, but rather an essential feature of the urban landscape. Although still predominantly a tea-drinking nation, China is rapidly developing a taste for coffee, which could have significant implications for the world market.

Market structure of Chinese Coffee

According to market research firm Euromonitor, the Chinese coffee market is predominantly composed of instant coffee. Indeed, instant coffee makes up around 99% of retail sales by volume and 98% by value, although fresh roasted coffee is growing at a faster rate. The most popular types of instant coffee are the 3-in-1 products which contain coffee, sugar and whitener, as well as potential flavourings. Nevertheless, the rising popularity of coffee shops and coffee culture in general is promoting growth in fresh roast and ground coffee. Furthermore, on-trade sales are increasing faster than retail sales, with the number of café outlets in China estimated at 13,834 by the end of 2013. As disposable incomes rise, consumers tend to ‘trade up’ to a more premium product. The most dynamic growth is found in retail sales of coffee pods, although in absolute terms they remain a niche category.

Analysis of Coffee Market in China

People worldwide drink a total of 7.4 billion cups of coffee every year, and 20 million cups of coffee are consumed every day. Every coffee drinker drinks an average of 120 cups annually. Coffee beans with a retail value of US$80 billion are sold each year, which puts coffee second only to petroleum on a list of the top-selling commodities. Average coffee consumption in China is less than one cup per person per year, and consumption is still less than five cups per person per year in urban areas. Annual coffee sales are only approximately ¥4 billion. China’s coffee market therefore offers boundless potential. The coffee market is growing by 30% annually. As a consequence, the coffee industry and coffee shop operation represent highly promising blue sea business areas.

Marketing and Trade of Chinese Coffee

In Yunnan about half of the crop went to export markets in 2016, generating $280 million in earnings. Most Chinese coffee beans are commercial grade and exports are primarily green beans sent to European markets. The United States is also an export market for Chinese beans, with Starbucks purchasing more than half of the coffee imported into the U.S. from China in January-September 2014. Major trading houses like Volcafe, the coffee arm of London-based commodities trader ED&F Man with an office in Yunnan, and Miami-based commodities trader Coex, source from China to balance deficits in supply from traditional exporting countries during years of drought or crop rust.

The emergence of dedicated specialty coffee farming commenced around 2009 under early adopters such as Hu Xixiang from Mangzhang Farms in Menglian (Pu’er), Yunnan alongside the support of industry professionals such as Timothy Heinze, Joshua Jagelman, and Saxon Wright. While specialty coffee production in China is still less than 2% of total volumes, China’s recent selection (2018) as the portrait country at the world’s largest Specialty Coffee trade show held by the Specialty Coffee Association emphasizes the growing recognition of China as producer of specialty grade coffees.

Chongqing has emerged as the largest domestic trading hub for coffee. The Chongqing Coffee Exchange was established by the Chongqing Energy Group as a trading platform for both home grown and Southeast Asia sourced coffee. The exchange takes advantage of Chongqing’s role as a transportation hub. The city is the starting point of the Chongqing-Xinjiang-Europe freight train, a corridor of the Belt and Road Initiative. Pu’er City also saw the establishment of a coffee trading hub when Yunnan Coffee Exchange started operations in January 2016.