No 30

Why China Represents a Great Opportunity for Colombian coffee

August, 2015

TRENDS

Why China Represents a Great Opportunity for Colombian coffee

The low penetration that coffee has had in this market traditionally dominated by tea is largely due to the fact that Chinese coffee shops did not sell quality beans, such as Colombian, what now contrasts with a rising purchasing power and an increasing number of educated and sophisticated consumers, says Wang Sen, manager of CC Coffee.

In China, a market of growing purchasing power that for many years had a limited coffee culture, Café de Colombia’s differentiated and high-quality offer represents a great market opportunity, says Wang Sen, a Chinese entrepreneur and writer.

Wang, general manager of the CC Coffee coffee shop chain (with 16 stores in the city of Wu Han and now planning to expand to cities such as Shanghai, Beijing, Guangzhou and Shenzhen) and the author of several coffee books, visited Colombia to become familiar with this coffee origin and Café de Colombia’s portfolio.

Wang, who also visited the National Coffee Research Center (Cenicafé, the R&D branch of Café de Colombia) and the Buencafé freeze-dried coffee factory, plans to open in September a Coffee Museum in his city, which will contribute to educate his fellow citizens about the coffee culture, which in turn will translate into future consumers.

Wang points out that young generations in China do not drink exclusively tea; they are open and seek different hot drink options. “They want to drink tea, but they can also drink coffee; the main reason why Chinese people don’t drink coffee is that they had never drunk good coffee,” he says.

The Chinese visitor, a coffee lover, says that for the last 20 years there have been a lot of coffee shops in China, but many owners don’t drink coffee: they only think it’s a fashion business, buy the worst coffee because it’s very cheap and think customers don’t recognize a cup of good coffee. “So they wasted almost 20 years in China, but now the situation is different,” Wang remarks.

“In the past 20 years Chinese people are getting rich, the young generations and especially their families worked hard and they have some money, they have a house, a car, so they will accept coffee, it’s not a fight against tea.”

“In Japan, South Korea or Taiwan people drink coffee, but they also drink tea, whose consumption is growing as well as coffee consumption, they are not rivals in the market. Some Chinese people don’t understand this; they think that if coffee consumption grows, tea consumption will get down. I don’t think so, because we have more money, we can drink tea in some occasions and coffee in others, but before they never drank anything,” he says.

For all these reasons, Wang forecasts that in a couple of decades China will become the largest coffee market in the world, surpassing the United States, and he personally has contributed to educate and raise the coffee culture in China; for all these reasons he is famous there. “We do a lot of promotion in colleges in our city, we will open some new coffee shops in colleges, this never happened in the past,” he refers.

The Chinese coffee market
The steady growth of coffee market in China confirms Wang’s perceptions. According to figures by Euromonitor, the value of the market rose from US$ 542 million in 2009 to almost US$ 1,074 in 2014 (a 98% increase), a quite fast growth pace that makes this market increasingly attractive to quality coffee producers.

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Source: Passport Euromonitor 2015


In line with global trends, online coffee sales grow year after year in this Asian market.

And although the Chinese market continues to be dominated by instant coffee, with 97.3% of coffee sales in the country, its growth is mature (about 3.3% per year), while single-cup coffee sales grow at an accelerated rate (between 2013 and 2014 the category grew by 156%), according to figures by Euromonitor 2015.

Growth of single-cup coffee sales has relevance because it is related to more sophisticated consumers looking for increasingly personalized and differentiated experiences. This also represents new opportunities for Colombian coffee licensed brands, as it has been recognized as a high-quality coffee, with unique attributes, in different markets.

Wang’s Work
“With the young generation we promote cupping, we import a lot of different coffees. The first thing they say is, ‘Wow, it’s quite different’, because in their memories coffee was bitter, expensive, not good. Ten or fifteen years ago, many people went to a coffee shop because it was a fashion, they put the cup on the table, they drank once and left it,” Wang remembers.

He also explains that because of the internet young people in China now can get a lot of information about different products and life styles, which include coffee drinking. He also recognizes that travels abroad made by Chinese have grown significantly, either for study or tourism, and this has allowed them to learn about cultures where coffee consumption is more sophisticated. “But the most important thing is to give them good coffee,” he concludes.

In fact, taking advantage of new technologies, CC Coffee offers the possibility of ordering and paying coffee by mobile phones, as part of an innovative business model of small coffee shops with delivery service and affordable prices, which have enabled them to grow. At the end of this year they expect to reach 30 coffee shops, including four in Shanghai, and they plan to reach 100 coffee shops in different cities by 2016.

CC Coffee buys every bag of fresh coffee after cupping it, beans are roasted by themselves and they pay a lot of attention to quality. Last year’s cupping champion in China was from his company, as well as the roasting champion.

 

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