Coffee production and consumption in China

Introduction

While the Chinese economy is not traditionally based on coffee output, it is evident that in recent times, there has been an increase in coffee production as well as consumption in the Chinese market. The retail volume sales of coffee in the Chinese market were 65,000 tons in 2016. The increase in sales was prompted by increased coffee demand in the market. Many local and international coffee houses increased their operations in the Chinese market in an effort to exploit the increased coffee culture in the country. Companies such as nestle dominate the coffee in the Chinese market accounting for 66% of the entire market share (Daily coffee News 2017). Such organization not only benefits the government through taxes, but they equally provide employment to high number of the local people. Leading players in the coffee market are focusing on premium coffee as opposed to mass market coffee. Advancement in technology in production of coffee has increased satisfaction among customers with the service provided. It is worth noting that the increased consumption of coffee in the economy has equally boosted access to the product among consumers. Economies that do not have natural advantage in production of products can equally enhance their access to such products through acquired advantage. 

The increase in demand for coffee in china has increased the impetus to grow coffee within the Chinese market. For instance, in the Yunnan province, there is high number of people growing coffees. Such increase in coffee growing has increased the coffee output in the economy further accelerating the rate of growth of the country’s gross domestic product. An image of coffee farmers in the Yunnan province is as presented in the diagram below

Source: Towson, & Woetzel (2015). 

Unlike in the English world where coffee is a staple, it is treated as a premium product within the Chinese market. The price of coffee in china is higher than the price charged to consumers in other locations such as the United Kingdom of Britain. Such a price has a number of implications to the Chinese economy. For instance, a high price may result to economic exploitation of then citizens. As a result, they may not be in a position to direct other income to other uses. At the same time, a high price increases the profitability of firms in the Chinese market increasing their sustainability (Forbes, 2017).

The prevalence of international coffee retailers in china has equally contributed to the growth of coffee market and culture within the Chinese market. For instance, coffee houses such as Costa and Starbucks are found in almost every city. Starbucks has planned to increase its coffee stores to 3000 by 2019.cost equally p0lans to expand its coffee stores in the country from 344 to 900 by 2020. An image of star bucks in store in Beijing is as presented in the image below

Source: Towson, & Woetzel (2015). 

Starbucks has opened a 30,000 square feet roaster in shanghais China. It provides augmented reality experiences in shopping for coffee in the market.. The prevalence of such brands in the Chinese market has increased the attractiveness of the Chinese market as a coffee destination. The entry of foreign firms in the market has enhanced the economic performance in the country ( Towson, & Woetzel, 2015).  While the Chinese market have been previously associated with tea, it is clear that emerging trends in the use of coffee in the country has enhanced the economic performance of the country. The 115th session of the international council ob coffee has indicated that the double digit growth in coffee consumption as well as consumption has led to China emerging as a bigger producer of coffee than Kenya and Tanzania, some of the best producers of coffee in the world combined. As the Chinese economy continues to expand, the pool of coffee consumers with high level of disposable income in the country has increased. Coffee consumption in the Chinese market has been growing at an average of 16% for the past 10 years. As a result, there has been an increase in the level of coffee demand and supply in the country (Forbes, 2017).

Sustainability issues have emerged as a result of the growth of coffee in the Yunnan province. The coffee is sun grown rather than shade grown. As a result, it demands more water and fertilizers. In an effort to reduce the environmental impact, coffee houses such as at bucks are only buying shade grown coffee. This move has been important in ensuring that the level of environmental degradation in Beijing as a result of coffee production is reduced. Most of the coffee that id produced in the Yunnan province in china is exported with only 30% of the coffee being consumed locally ( Campbell, 2004). 

While many people do not associate china with coffee production, it is evident that the coffee industry in the country has been in existence for the past one century. Coffee was introduced in the country in late 1800s by a French missionary. Coffee growth within Yunann is all Arabica. Large amount of this coffee is exported to Germany. Most of the coffee that the Chinese drink is imported from Vietnam. Exports end up increasing income to the country. At the same time, the country ends up spending resources in importation of coffee. Coffee imports and exports in china end up influencing the balance of trade in the country. Coffee thus significantly influences the Chinese economy. Increased production of coffee within the Yunann province has led to farmers focusing on coffee production in the country as opposed to seeking employment in industries where there have been many cases of exploitation by local and foreign firms. Increased revenues from coffee to farmers have increased their purchasing power as well as standard of living. At the same time, it has increased access by such farmers to coffee drinks. Diversification of production within the Chinese economy has reduced the risks associated with organizations investing in a single industry. It has also increased opportunities to organizations seeking income generation from the Chinese economy. Coffee has thus significantly influenced the growth of the Chinese economy ( Towson, & Woetzel, 2015).  Nevertheless, coffee production in china only forms a small part of the gross domestic product. The GDP of China is largely driven by industrial outputs including mining, textile, equipments and automobiles among many other products that are developed within the Chinese economy (Central Intelligence Agency, 2017). Nevertheless, it has contributed to economic growth and development in the country. For instance, in 2016, unemployment levels in China were 4%. This is an indication that the coffee industry among many other industries in the country are aiding in provision of employment to the Chinese citizens ( Campbell, 2004). 

Conclusion

Based on the above assessment of the Chinese coffee market, production and consumption trends, it is clear that while coffee production still constitutes a small percentage of the gross domestic product, it is fast growing. Coffee production and consumption has grown by 16% per annum for the past 10 years. As a result, it has attracted local and foreign coffee roasters. It is equally worth noting that coffee is still retailing at a higher price in China as compared to other countries. The above report indicates that in coming decades, coffee production is likely to surpass production in many other countries. This will significantly enhance economic growth and development in the country.

References

Campbell, C. (2004).  The China Study: Startling Implications For Diet, Weight Loss And Long-Term Health . New York: McGraw Hills

Central Intelligence Agency (2017). China. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html

Daily coffee News (2017). Growth of Chinese coffee market. Retrieved from https://dailycoffeenews.com/2015/11/16/growth-of-the-chinese-coffee-market-carries-unknown-global-implications/

Forbes (2017). Starbucks. Retrieved from https://www.forbes.com/2010/04/28/starbucks-china-consumers-markets-economy-coffee.html#3a2d72973a0e

Towson, J., & Woetzel, J. (2015).  The 1 hour China consumer book: Five short stories that explain the brutal fight for one billion consumers . S.l.: Towson.