More than just tea, China brews new success story

Editor's note: Implementation of the China-EU Geographical Indications Agreement is expected to expand the reach of quality products from both sides. This series looks at goods poised to tap into East-West markets.

Chen Yu put his nose close to the cup and took in the aroma of the coffee with a contented whiff. "Yes, this is the smell of the comforts of home," said the 35-year-old, who works as a systems analyst in Beijing.

Chen began drinking espresso regularly as a college student in Rome about a decade ago. However, his passion for the brew is no longer unusual in his home country. The increasing popularity of coffee in China has fueled demand for coffee beans from his native Yunnan province in recent years, with many consumers and growers anticipating unprecedented growth at home and abroad.

China's coffee market stood at an estimated 100 billion yuan ($15.6 billion) in 2019, according to global research company Mintel. The coffee-producing area in Yunnan, China's largest producer of the bean, has grown steadily over the past decade to cover 99,800 hectares by the end of last year. More than 200,000 households, or over 1 million residents across at least eight prefectures and 31 counties, are involved in the industry, according to the local industry association.

Coffee has been grown in the province for more than a century. Its warm climate, ample rainfall and altitudes of between 500 meters and 1,800 meters provide ideal growing conditions for the plants. Yunnan is known for its high-quality black tea, but in recent years, coffee traders and connoisseurs discovered the province's Arabica beans, which are noted for their sweet flavor.

In 2019, Yunnan raw coffee beans and related products totaling more than 56,100 metric tons were exported to at least 55 countries and regions, including European Union countries, the United States, Japan and South Korea, according to Customs figures.

There are more than 420 major coffee-related enterprises throughout Yunnan, with over 290 businesses and associations engaged in processing and marketing the beans. At least seven businesses each have annual sales revenue of more than 100 million yuan, according to local government figures.

The industry is poised to expand globally, following the inclusion of coffee products from Yunnan's Baoshan and Pu'er areas on the list of China's 100 geographical indications under protection in the EU. A geographical indication is a label given to products that possess a specific geographical origin with qualities or a reputation that are due to that origin, according to the World Intellectual Property Organization.

Late last year, the Chinese and EU sides rolled out measures to protect 100 of the EU's geographical indications and 100 Chinese geographical indications against imitations.

Coffee from Xinglong in South China's Hainan province has also been listed, with the inclusions widely seen as growing recognition of iconic, quality Chinese agricultural products in both domestic and international markets.

Hu Lu, vice-chairman of Yunnan's coffee industry association said Europe, the world's top coffee consumption market, fits perfectly with Yunnan's production and sales aspirations.

"In the past, Yunnan coffee was sold to Europe, which is far away, and it was deeply loved by European consumers. With East-West express rail freight and countries along the link having preferences for coffee, the beverage can become a good vehicle to help fuel the global economy," he said.

"Offering Yunnan coffee to Europe will allow more European friends to understand the province and perceive China through a cup of coffee."

Zhang Jiwei, deputy director of Yunnan Nongken Coffee Co, a leading industry player, has seen raw bean exports rise strongly for much of the past two decades.

"We are consolidating channels and opening up new markets, expanding the scale of exports and actively developing new trade models. Through large-scale development cooperation, strengthening of technical expertise, standardizing of planting and processing standards, we are improving and stabilizing the quality of the product," Zhang said.

Chinese coffee exports rank among the tops in the world, covering major markets from East and Southeast Asia, to Australia, Europe, the Middle East and North America, Zhang said. The company will "actively integrate the sustainable development of the domestic market with the steady expansion of exports to meet multiproduct demand for Yunnan's coffee", he added.

Expansion plans

Hainan has a rich history of coffee cultivation dating back to 1887. Xinglong, a town in Wanning in the province's southeast, is a major coffee hub and boasts ideal growing conditions with its rich soil and tropical climate.

The industry was started after overseas Chinese returning from countries in Southeast Asia brought their coffee-drinking habits with them. This new demand significantly contributed to the growth of the industry in its early days, said local coffee industry association deputy secretary-general Wu Chunguang.

Xinglong's 36,000 residents have continued the town's passion for the beverage. More than 200 cafes do brisk business and per capita annual coffee consumption is nearly 300 cups, according to Hainan coffee association figures.

Wanning authorities have in recent years focused on improving farming practices, building enterprise capacity and exploring related tourism projects and other measures to leverage the city's coffee heritage for economic development. Coffee cultivation has grown to cover more than 660 hectares, with output value recorded at over 80 million yuan four years ago.

In a sign of the development of Hainan's coffee industry beyond its shores, Thai conglomerate Charoen Pokphand Group is banking on the growth trends via a new Wanning Xinglong "coffee city" project.

With about 100 million yuan of investment, the project includes a demonstration base planting area covering 72 hectares, as well as processing, research and development, training, sales and other services and facilities.

The project is expected to create 3,200 jobs, help farmers attain household incomes of up to 100,000 yuan a year and attract 1 million tourists annually, according to the company. When cultivation areas cover 4,000 hectares, output is expected to reach 4,200 tons a year, with annual output value of 1.2 billion yuan, it said.

The project's general manager, Zhao Jinlong, said Hainan's Xinglong coffee is well poised to be successful in domestic and international markets.

"The Chinese economy has developed to a new stage, with consumption upgrades to come. The coffee industry is also set to undergo a transformation, with China's consumer population ushering in new development," Wu added.

"Xinglong coffee will certainly be able to fit the times, helping to showcase the great rejuvenation of the Chinese nation."