China eyes domination of coffee market
It may just be a matter of time before China overtakes the United States to be the world’s biggest consumer of coffee — it is estimated that Americans drink 400 million cups daily.
The recent establishment of the Coffee Exchange (Center) in the China (Shanghai) Pilot Free Trade Zone signaled China’s intention to be a major player on the global stage where they can exercise some influence on the pricing of the world’s second most traded commodity after crude oil.
Furthermore, coffee consumption in China is growing at a rate of 15 percent per annum, making it the world’s fastest growing market for coffee, according to statistics from the China Coffee Association in Beijing.
Because of its ideal geographic location at the FTZ , which has reduced or eliminated a series of trade barriers including finance, taxation and logistics, it is believed that the coffee exchange can eventually become a major trading hub in Asia while substantially reducing the price of coffee beans moving through or exported to China.
“Essentially, we hope it (the center) can help China become a leader in the global coffee industry. And this should not only be about the consumption of coffee per capita per day, but also about the growth of coffee plantations and the price decision process,” said Wang Zhendong, chief officer of the center.
Trade value of the center is expected to reach 84 billion yuan ($13.5 billion) by the end of 2017 and surpass 120 billion yuan a year later. When that happens, the center will overtake Singapore as Asian’s largest commodity exchange for coffee futures and be ranked among the world’s top three alongside New York’s International Exchange and London’s Euronext LIFFE.
In addition to the businessto-business platform, the center will also have a retail space for the country’s coffee lovers to sample beans from other countries, an international barista training center and a coffee-oriented service center that aims to bring together investors and young entrepreneurs who “may have any novel idea about coffee”, added Wang.
While the main focus of the center is on importing coffee beans that are grown around the world, there is also hope that the coffee exchange can raise awareness of China’s own coffee beans from Yunnan province and enable it to be priced in the market, as well as exported to neighboring countries such as Japan and South Korea.
China may be a traditionally tea-sipping nation, but it is no stranger to coffee. Interest in the product has been steadily growing since 1999 when American coffee chain Starbucks opened its first store in Beijing. The brand now has more than 1,000 branches across the country and can be credited for having introduced contemporary coffee culture in China, popularizing terminologies like cappuccino, latte, and grande.
Wang added that many of the independent boutique cafes that have been sprouting all over China today have used Starbucks as a reference when deciding on their menu and prices. The proliferation of these cafes has also resulted in an increase in the number of coffee aficionados signing up for commercial training courses offered by institutions like the Specialty Coffee Association of America.
Coffee shops had flourished in Shanghai from as early as the 1930’s. While most of the coffee shops during that era no longer exist, there are a few surviving ones still frequented by coffee enthusiasts who are as old as the shops. Shanghai is still the center of China’s coffee culture today — the city has more than 100 Starbucks outlets, in addition to a thriving specialty coffee scene. The average annual coffee consumption per person in Shanghai is about 20 cups, one of the highest in China.