China wakes up and smells the coffee as more cafes open across nation

A small city in Zhejiang is typical of many now getting taste of cafe craze

PUBLISHED : Sunday, 22 November, 2015, 3:12am
UPDATED : Wednesday, 25 November, 2015, 8:00pm

When Starbucks opened its first shop in his hometown, Haining, two years ago, Cui Yun was among its first regular customers.

Now he is busy preparing to open his own cafe in this small city in Zhejiang province, which has seen the number of coffee shops soar from just three in 2012 to more than 20 this year.

"From megacities such as Beijing to fourth-tier cities like Haining, one of the biggest changes on the streets in recent years has been flourishing coffee shops as young Chinese embrace Western lifestyles," said Cui.

With an annual growth of 15 per cent in consumption, compared with the global average of two per cent, China is the fastest-growing coffee market in the world, industry insiders said.

The potential is huge especially when the consumption per head is considered - mainlanders consume less than 50 grams of coffee a year, merely four per cent of the world's average, according to Shenzhen-based consultancy Zero Power Intelligence.

Alejandra Quan, global CEO of Our Coffee, a grower from Guatemala, has tried to expand his business in China as he saw a promising future for coffee in the tea-drinking nation.

"Coffee is the most-drunk liquid after water in the world. When Chinese start drinking coffee in earnest, they too will probably drink more coffee than water," he joked.

However, mainland coffee drinkers care more about the atmosphere of a coffee shop than the beverage itself, and the most popular coffee drinks are sweet milky ones such as mocha and latte.

But Guan believes this will soon change. "There has been a lot of education about coffee and I think in two or three years people will know what's really good and what's bad," he said at the Shanghai International Coffee Industry Expo earlier this month.

Jian Xueya, finance director of the China agent for Brazilian coffee firm Unique Cafes, which targets high-end restaurants and hotels, said mainlanders were merely curious about coffee a few years ago, but now more people have developed a habit.

"It's a little difficult for us to sell prime coffee here because few people know how to appreciate it. They like a milky, sweet taste," she said.

"But there's still a space for growth, and that's why we're educating people, like holding tasting events, while selling the products."

Things have been proven quite different for international outlets which are better adapted for the Chinese tastes. Starbucks, which opened its first mainland store in 1999, has planned to double its store count in China to more than 3,000 stores by 2019, while British chain Costa plans to expand from 344 shops to 900 by 2020.

In Shanghai, where half of the mainland's coffee consumption takes place, the nation's biggest coffee trading centre has been established in the port city's free-trade zone. "Everybody is looking at China, and Shanghai is the first place in China where coffee culture started to develop," said Yuan Haojun, deputy general manager of the Shanghai Coffee Exchange.

The company is establishing an offline marketplace and two online platforms, one business-to-business and the other business-to-customer, where beans, ground coffee, coffee-making equipment, drinking vessels and products such as milk and sugar would be traded.

Cui, one of the post-1980s generation whose timber export business has declined in the past year, is confident his coffee shop will prove be a good investment amid the economic slowdown. "For China, the coffee business is only beginning. We're moving with the trend," he said.