As one of the three largest non-alcoholic beverages in the world, coffee grows rapidly as China’s economy takeoff, and the national coffee consumption has continued to grow. According to the report of "2017-2021 China Coffee Industry Investment Analysis and Forecast", the annual growth rate of coffee consumption is between 15% and 20% in these years, which is up to 10 times higher than the global coffee consumption growth (2%) for the corresponding period. The fast growing coffee consumption has led to an increase of the coffee imports.
IMPORTED COFFEE CAPTURES THE CONSUMPTION TREND
In China’s urban areas, coffee consumption is rising rapidly. The data from the United States Department of Agriculture (USDA) shows that China ’s consumption of raw coffee beans increased from 116,900 bags in 2003 (specification is 60kg per bag, the same below) to 305,400 bags in 2018, with the compound annual growth rate of 24.28%. It is almost 10 times higher than the rate (2.58%) of global coffee consumption during the same period.
Meanwhile, China’s consumers, especially youngsters, are drinking coffee more frequently. According to Frost & Sullivan data, Chinese consumers currently consume 6.2 cups of coffee per year, which has nearly doubled from 2013. Moreover, the growth in first-tier cities such as Beijing, Shanghai and Guangzhou is even more noticeable--20 cups of coffee per person per year. However, the coffee consumption of developed countries are much higher than that of China. For example, 400 cups of coffee are consumed each year in America while that number is 250 in UK and 360 in Japan which is almost 60 times as much as the consumption in China. Although the consumption in China is still far from developed countries in terms of coffee consumption, this does not mean that Chinese people don’t like coffee. On the contrary, seen from the continuous growth of coffee consumption, China's coffee market is full of potential for huge development.
According to the data of Tmall platform, about 18 million Chinese consumers spent 2.5 billion yuan on coffees. As income and standard of living increase, the coffee culture is more familiar to Chinese. With this situation and the huge demographic dividend, it is expected that China's coffee market scale will exceed 100 billion by 2025.
The growing coffee market has also driven the rise of imported coffee. The supply and demand report released by the USDA shows that the raw coffee beans imported by China are increasing year by year and have increased about 2.5 times from 2012 to 2018. The report also shows that there is an inflection point during 2016~2017 with a significant increase of the imports of raw coffee bean. The growth rate is twice as fast as that during 2015~2016. The coffee imports increased to 3.65 million bags in 2017 and even more to 3.82 million bags in 2018. Based on this, some agencies predict that China's coffee imports will grow by 20% year on year and is expected to continue to grow by about 10% in 2020. The imports of fresh coffee beans, roasted and ground coffee as well as instant coffee will increase by 1.6%.
COFFEE BEANS TOP THE LIST OF COFFEE IMPORTS
Among Chinese imported coffee, coffee beans account most. According to China Customs data, caffeinated raw beans account for 75% of the total imports of coffee beans while caffeinated roasted beans account for 22%. These two together account for nearly 99%. From China Customs data, the import volume of raw beans was 34,000 tons while that of the roasted beans was 8,800 tons between January and August in 2019. Compared with the corresponding period of last year, the imports of raw beans and roasted beans have increased by 13% and 17% respectively. Based on the current situation, the imports of both beans are expected to continue to grow.
Today, China imports beans from more than 50 countries. Indonesia, Malaysia, Italy, Vietnam, the United States, Brazil and Guatemala are the main sources. Data shows that Vietnam is currently China’s largest import source of raw beans. From January to August in 2019, 15,000 tons of beans valued at 160 million yuan were imported from Vietnam. Beans from Brazil ranked second with the value of 130 million yuan and the volume of about 70,000 tons. Besides, the largest import source of roasted beans is Malaysia with the volume of nearly 30 thousand tons, which is 10,800 tons more than the second place, Italy. Moreover, the price of decaffeinated beans is about 30% to 60% higher than that of caffeinated beans.
Beyond beans, liquid coffee concentrates together with coffee-based products which include liquid coffee, instant coffee powder and other coffee products, are the large category of China’s imported coffee. The import volume of this category are also eye-catching with the volume of up to 19,000 tons and a year-on-year growth of 19%, ranking only second to the raw beans. From the data of 2018, the import volume rose in April, May, August and peaked in September at nearly 9,000 tons. And the import value was up to 300 million yuan.
The raw beans are classified into different levels and used diversely after its entry to China. The high-end coffee beans enter boutique coffee shops and are further processed into fresh ground coffee for high-end coffee lovers while some of them are roasted and packaged, then sold to consumers directly. But the larger part of the commercial beans enter coffee roasters and coffee workshops for further processing into coffee powder. Then, the coffee powder are made into drip bag coffee and coffee capsule, or blended with other ingredients to produce coffees like ready-to-drink coffee, instant coffee by various coffee brands.