COFFEE NEWS

Global coffee supply is expected to be some 6-8 million 60-kg bags below demand in 2009/10, due in part to falling output in key producers, International Coffee Organization chief Nestor Osorio said.

Yunnan-based coffee grower Hogood Coffee has reportedly signed a deal to export 240 tons of coffee beans per month to the US, a major step for the company, which is aiming to become China’s first listed coffee company.

The agreement between Hogood and Denmark-based ECUM Coffee Group’s US subsidiary Atlantic (USA) Inc, will commence in April and will be the largest direct export of Yunnan coffee beans to a Western country by a Chinese company to date.

Yunnan coffee, which accounts for 98 percent of the coffee grown in China, typically reaches foreign markets via international suppliers including Starbucks and Nescafe.

Hogood’s chairman Xiong Xiangru said that the company’s development strategy in the coming years will be to move away from being a supplier to foreign companies and marketing its own branded products. However, Hogood – formerly known as Hougu – may find that its new English name is awkward to Western ears.

Hogood’s export deal is the second major boost for the ‘Yunnan coffee’ brand in the last half year. Last November, Starbucks announced that it would begin marketing a blend featuring Yunnan coffee under the name ‘South of the Clouds‘.

Source: http://gokunming.com/en/blog/item/808/yunnan_coffee_grower_to_export_to_the_us

Coffee demand in China, the fastest- growing major economy, may keep expanding by 20 percent a year if roasters offer products suited to local consumer budgets and tastes, Japanese trading company Marubeni Corp. said.

The number of coffee roasting companies in China has increased to 30 from 25 a year earlier as sales rise to consumers in Shanghai and other coastal cities, Kazuyuki Kajiwara, general manager in Marubeni’s coffee section, said in an interview in Tokyo yesterday.

Starbucks Corp., the world’s largest coffee-shop chain, said last year China had the potential to become its largest market outside the U.S. as the number of middle-class consumers rises. Japanese roasters such as Tokyo-based Unicafe Inc. are targeting sales in the country as opportunities decrease in a mature home market with a gradually declining population.

“We estimate coffee consumption in China is growing by 20 percent on year, or at the same pace of increase in roasters,” Kajiwara said. The Chinese market will probably keep expanding at a similar pace as potential coffee drinkers in China are as many as 200 million people, he added.

China’s coffee consumption is probably 30,000 metric tons a year, about 7.5 percent of Japanese demand of more than 400,000 tons, Kajiwara estimated. Marubeni established a coffee-roasting subsidiary in Shanghai in 2006.

Aroma Coffee (Shanghai) Co. started production in October 2007 with roasting capacity of 300 tons a year. Marubeni aims to boost sales in China after gaining a 15 percent share in South Korea’s coffee market of 100,000 tons a year, Kajiwara said.

Flavor Preference

“We believe the Chinese market has a potential to grow depending on the quality and price of coffee products,” Kajiwara said. Coffee at some upmarket stores costs 40 yuan ($5.85) in China, as expensive as in Tokyo, while Chinese roasters also failed to meet local preferences for a strong flavor, he said.

Aroma Coffee roasts imported and domestic beans, Kajiwara said. China produces 25,000 tons of beans a year, of which 5,000 tons are the robusta variety, grown in Hainan and mainly used in instant coffee, and the rest are arabica beans produced in Yunnan and preferred by coffee house operators.

China sells about 60 percent of its coffee output overseas, and half of the exports are directed to Japan for production of soluble coffee, Kajiwara said. China also imports about 15,000 tons of coffee a year, including instant coffee, he added.

Japan, the world’s third-largest coffee importer, purchased 387,538 tons of green coffee beans in 2008, down 0.6 percent from a year earlier, according to the Ministry of Finance. The country also imported 6,652 tons of roasted coffee beans last year, up 14 percent from 2007, the ministry said in its Web site.

Japan’s Imports

Japanese imports, including soluble and liquid coffee, peaked at 458,507 tons in 2006 and then retreated to 425,778 tons in 2007 because of rising international prices, according to All Japan Coffee Association, a roasters’ organization.

Of the total imports, one-third is used for production of canned coffee, Kajiwara said. Half of the remaining volume is used to produce instant coffee, he added.

“I don’t see Japan’s recession hurting domestic coffee consumption,” Kajiwara said. “Consumers may be drinking less coffee at shops, but they should be brewing it at home or having cheaper instant coffee.”

Marubeni is Japan’s largest coffee importer with a 25 percent share in the domestic market. The company aims to boost sales by increasing shipments of roasted coffee or processed products to end-users, Kajiwara said. Globally Marubeni sells 3 million bags of coffee a year. One bag weighs 60 kilograms (132 pounds).

Source: http://www.bloomberg.com/apps/news?pid=20601080&sid=aq3ewkyLbKuc&refer=asia

The U.S. Food and Drug Administration has warned consumers not to drink the Taiwanese-made Mr. Brown instant coffee and milk tea products because of possible melamine contamination. Melamine is a chemical used to make plastic and fertilizer. It is blamed for the illnesses and deaths of thousands of pets in the United States last year. Doctors say melamine can cause kidney stones and lead to kidney failure. And chocolate maker Cadbury has pulled products made at its Beijing plant from Asian store shelves after finding traces melamine in its chocolate. Cadbury Asia Pacific said it was recalling all 11 products made at the chocolate factory as a precaution after preliminary test results “cast doubt on the integrity of a range of our products manufactured in China.” Most of the recalled sweets are sold in mainland China, Hong Kong and Taiwan. One product line, Cadbury Eclairs Candy, is also sold in Australia. In the U.S. the FDA asked retailers and food service operators to remove the Mr. Brown instant coffee and milk tea products from sale or service. FDA officials continue testing milk-based products imported from China and have not found any melamine contamination. Other countries, however, have found melamine in food products from that country. The New Zealand Food Safety Authority said it found high levels of that chemical in the Chinese-made White Rabbit Creamy Candies. The FDA has added White Rabbit candy to its list of products being inspected at ports of entry, but so far no melamine-tainted goods from China have turned up. And two U.S. food makers are investigating Indonesian claims that high traces of melamine had been found in Chinese-made Oreos, M&Ms and Snickers, but stressed the same goods had tested negative in other Asian countries.

Source: http://www.wpxi.com/consumer/17581403/detail.html

While everyone has heard of Chinese tea, Chinese Coffee somehow just sounds wrong; unless it is an Al Pacino movie. And while China is famous for tea, they are becoming known in the coffee world too, both in the retail coffee shop world, and the wholesale green coffee arena. Coffee was actually brought to China in the late 1800’s by Jesuits. In the 1930’s, there was a coffee boom, when places like Shanghai were popular destination spots with the so called Western Adventurer. At that time though, many of the cafes were run by Westerners. There was a bust for a few decades afterwards, but there is another boom on the rise which really started as far back as the late 1980’s. And this time, many of the coffee serving establishments are owned or run by Chinese, and there are now plantations that produce green coffee for domestic and export, and that continue to grow in area and output every year.

Coffee drinking in China is still associated with the West, and is seen as more of a fashion statement, and a luxury, than something you prepare at home on your way to work. But consumption in general is on the rise, and the numbers do bear this out. It should be noted however, that much of the coffee consumption in China is currently in the form of instant coffee. Since coffee is still fairly new, the Chinese are going to need time to appreciate freshly roasted coffee. And since instant coffee is relatively cheap and easy to find, those are just more reasons for it’s popularity. And don’t forget that tea is very cheap, is the national drink, and has been around for thousands of years; so coffee has a lot of competition in China.

Starbucks in China

With regards to retail coffee, Starbucks had over 100 outlets in China in 2004, but now has over 400 locations, so the trend toward freshly roasted and brewed coffee is expected to continue it’s upward rise, even if instant coffee is still relegated to be prepared at home, complete with it’s 3-in-1 mix of freeze dried coffee, sugar, and cream. But even Starbucks needs to worry, as local competition (and outright copycats), have sprung up as direct competition. In fact one local Chinese coffee chain used Chinese characters which were almost the same as Starbucks. Starbucks sued. Sounds like coffee has many good years of growth ahead of it in China.

In 1988, the Chinese government and the United Nations Development Program started a project to produce coffee in the Yunnan province. Along with Nestle, the coffee growing area grew and grew. The Yunnan province has a climate and condition similar to that of Indonesia and parts of South America, so in theory the quality coming out of this area should be quite high. But they have had to fight things like quality control, and the “Dry Leaf” coffee virus. The efforts seemed to have worked, as coffee coming out of the premier Simao region is quite good considering how little time it has been. And it should get better as time goes on, as the government is now behind the effort, and the Ruili, Baoshan, and Kunming regions are also producing Arabica coffee beans. On a side note, unlike much of the Vietnamese Robusta coffee, a large amount of Arabica coffee comes out of China. They do grow Robusta, but mainly on Hainan island and in the Fujian province, but it only represents about 20 percent of the total grown in the country.

So what do the numbers look like? Total volume of coffee sales grew in China upwards of 90% from 1997 to 2003, and the numbers have continued a similar rise to the present. Low green coffee prices around the world, resulted in lower retail coffee prices in China. This raised awareness about coffee, and in turn caused more investment interest in both local green coffee growing operations, as well as retail coffee shops and internet cafes. Couple that with admiration for anything considered Western (and therefore hip), and you can see why coffee is taking off.

Could China of the future be the next Colombia of the 1970’s? A Chinese version of Juan Valdez? Who knows. But the fact that even small-time home roasters are getting their hands on green Chinese coffee (and enjoying it), tells us that China is capable of producing a decent clean tasting Arabica coffee bean, and the volume is there. If they keep it up, in a few years we may see Chinese coffee viewed in the same light as the likes of Kona Coffee, Jamaican Blue Mountain, and maybe even Kopi Luwak.

Source: http://ineedcoffee.com/08/chinese-coffee/

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