Coffee drinking culture perks up in China

Surging popularity of beverage among urbanites, sizable mid-income group spur sector growth

China is probably the last place where one would expect a large group of consumers to overwhelmingly take to coffee.

Traditionally home to products like oolong tea, Longjing (Dragon Well) tea and Xinyang Maojian tea, the country is, however, slowly seeing consumer preferences and consumption patterns evolve in favor of the dark beverage.

The fierce competition between global coffee chains such as Starbucks and Costa, and domestic players like Luckin Coffee and Manner Coffee, coupled with surging demand for coffee makers and beans sourced from various countries, have resulted in a greater number of coffee shops springing up across the country, leading to a significant increase in coffee consumption.

In fact, Jiangsu province in East China — a major coffee bean importing region — has seen a significant surge in green coffee bean imports.

The province imported 8,193 metric tons of green coffee beans valued at 250 million yuan ($34.9 million) in the first five months of 2023, a year-on-year growth rate of 65 percent, according to data from Nanjing Customs, a local unit of the General Administration of Customs.

"Our main imports were green coffee beans from Brazil, Colombia and Ethiopia over the past two years," said Wang Rui, a warehouse manager of Kunshan Yiguo International Trade Co Ltd in Kunshan, Jiangsu province.

The company has expanded its sourcing to include Costa Rica for the first time this year, importing 76.8 tons of green coffee beans from the Central American country in the first six months.

After the GAC permitted the import of coffee beans from Honduras in June, Wang's company is looking to source the beans from the Central American nation in the future.

"Coffee bean suppliers from Honduras are also making efforts to apply for business registration qualifications in China. Once they obtain export qualifications, we will be able to import coffee beans directly into China," said Wang. "Driven by consumers' diversified shopping preferences on coffee products, we will expand into more coffee-producing regions and bring high-quality specialty coffees to the home market, especially cities located in the Yangtze River Delta and the Pearl River Delta regions."

The origins of coffee bean exports are expanding and their import volume is growing, said Gong Kaiqing, president of Kunshan Kele Coffee Baking Co Ltd, adding that soaring orders mean the quantity of purchased raw coffee beans has increased notably compared to the same period last year.

"Regarding our coffee bean imports this year, we expect an increase of approximately 50 percent from 2022," he said.

The company has already made reservations for the second half of this year and the beginning of 2024, Wang said.

Kunshan, a major coffee importer and processor, imported 185 million yuan worth of coffee beans in the first five months of this year, a year-on-year growth of 206.5 percent, Customs data showed.

To secure its competitive edge in this rapidly expanding market, Kunshan launched a giant coffee bean storage and distribution center in mid-June to serve both the home market as well as the Asia-Pacific region.

With an investment of 380 million yuan, the facility can store 50,000 tons of coffee beans and achieve real-time monitoring of internal temperature, humidity and other parameters within its warehouses.

Supported by rising coffee consumption in cities as well as a sizable middle-income consumer group, China will continue to be a key consumer in this lucrative business segment, said Wang Qi, vice-president of the Beijing-based China National Food Industry Association.

Wang said global and domestic coffee chains are prioritizing human connections, promoting healthier performance and strengthening investments in digital capacities and innovation. They are allocating more resources and manpower to expand their presence in smaller cities in China, aiming to capture a larger consumer base at lower costs.

"This rapid expansion into smaller cities is advantageous for large on-premise coffee brands due to lower expenses on management, labor and rent compared to major cities," she said.