This document discusses opportunities and challenges for China's coffee industry. Climate change is reducing coffee production globally but China's climate allows for increased production. China has the potential to quadruple coffee output to meet future demand. Investing in improved cultivars and consistent processing could help China attract higher coffee prices. Expanding domestic coffee consumption through increased retail outlets and delivery also benefits producing nations. China is well-positioned to play a leadership role in the global coffee market and help small farmers achieve sustainable incomes through practices like fixed pricing.

1. CHINA’S COFFEE
ADVANTAGE
中国咖啡的优势
Hope and Opportunity:
How the coffee world
views China
希望与机遇：咖啡世
界如何看中国
China Benefits
中国的优势
Arabica Benefits
小粒咖啡的优势
Dan Bolton 白大熊
STiR coffee and tea

2. |GO GLOBAL OR ENLARGE DOMESTIC|扩展全球业务或
发展国内市场 投资步伐加快
2
THE PACE QUICKENS
Source: International Coffee Organization, Yunnan International Coffee Exchange,
CURRENT SITUATION: ADVANCING FROM GOOD TO GREAT
Will China supply the world? Or its fast-growing (CAGR 22%) domestic market? Or both?
Half of China’s coffee ships to Europe (49%) and U.S. (9%) where it disappears into blends.
The rest is processed as instant/RTD. Investors are interested but the timeline for returns is long
due to the small quantity (2%) of specialty grade cultivars and commodity prices dragged down
by inconsistent processing. In retail insufficient outlets slow consumption outside CBDs. Clusters of
shops reduce profitability in urban areas. In-home penetration of ground roast shows promise.

3. |INEVITABLE OUTCOMES |必然的结果
PREMIUMIZATION IS THE DRIVING FORCE BEHIND COFFEE GROWTH (not volume)
咖啡市场增长的核心动力在于品质和档次的提升，而不是数量增长
INCREASING DOMESTIC CONSUMPTION GREATLY BENEFITS PRODUCING NATIONS
咖啡生产国受益于国内市场消费的增长
COFFEE IS ASPIRATIONAL, SPENDING RISES AS INCOMES EXPAND
咖啡消费与收入增长成正比
CONSUMER EDUCATION INCREASES COFFEE DEMAND
消费者教育会促进咖啡需求增长
PEOPLE TODAY DRINK LESS, BUT BETTER COFFEE
当今的趋势：喝咖啡的量减少、质提高
好的趋势|POSITIVETRENDS
3
Source: Euromonitor International, Intergovernmental Panel on Climate Change (IPCC); Royal Botanic Gardens, Kew;
The International Center for Tropical Agriculture (CIAT); International Union for Conservation of Nature (IUCN);
Association for Science and Information on Coffee (ASIC);World Coffee Research (WCR) and Anacafe

4. |INEVITABLE OUTCOMES |必然的结果
BY 2050 HIGH TEMPS AND IRREGULAR RAIN WILL CUT ARABICA PRODUCTION BY HALF
预计到2050年，全球气候变暖和降水异常将使小粒咖啡产量减半
EXISTING CULTIVARS ARE LESS RESISTANT TO EVOLVING DISEASE AND PESTS
现有的种植品种将更容易受到新的病虫害影响
GENETIC DIVERSITY OF WILD COFFEE IS THREATENED WITH EXTINCTION AT ORIGIN
原产地野生咖啡的基因多样性面临灭绝性危险
LOW PRICE AND VOLATILITY PUNISH LARGE PRODUCERS AS LABOR COSTS (50-65%) RISE
咖啡价格降低和波动、劳动力成本上升将使大规模的咖啡生产商面临困境
UNRELIABLE INCOMES MAKE FARMING UNSUSTAINABLE FOR SMALLHOLDERS
种植咖啡的小农户面临收入不稳定造成的不可持续性
NEGATIVETRENDS|不好的趋势
Source: Euromonitor International, Intergovernmental Panel on Climate Change (IPCC); Royal Botanic Gardens, Kew; The
International Center for Tropical Agriculture (CIAT); International Union for Conservation of Nature (IUCN); Association for
Science and Information on Coffee (ASIC);World Coffee Research (WCR) and Anacafe
4

5. |CHINA’S GOOD FORTUNE |中国的好运
CLIMATE CRISIS|危机
Rising temperatures in traditional coffee producing regions in Africa, Brazil, and Central
America, where most of the world’s Arabica is now grown, have lowered yields and made
coffee vulnerable to fungi (Coffee Leaf Rust), the coffee borer beetle, infestations by
parasitic nematodes and other plant maladies.
OPPORTUNITY|机会
Global production is ahead of demand at this time but the quantity of quality coffee that
consumers prefer will fall precipitously by 2050. Can China quadruple output? Yes.
Will China improve its consistency to attract higher prices? This needs work.
5Source: Brazil’s Ipanema Coffee is a successful model, aggregating 14 farms totaling 4,230 hectares and producing135,000
60-kilo bags. Flexible processing produces high-grade natural as well as washed coffee in quantity.

6. |CHINA’S GOOD FORTUNE |中国的好运
PRICING CRISIS|危机
In Guatemala, Anacafé reports that at current pricing levels there is
0% chance of profitability. In fact, when a fair rate for the time and
labor of the family is calculated, there is a 50% chance of net loss.
Do not permit this dynamic to occur in China.
OPPORTUNITY|机会
Premiumization ultimately rewards entrepreneurial growers who invest
all that is necessary to deliver consistent quality. Consistency is critical.
Timing matters. Concentrate on producing the best coffee at fair prices.
6

7. |CHINA’S GOOD FORTUNE |中国的好运
CULTIVAR CRISIS|危机
Researchers are concerned that changing climate will reduce diversity.
OPPORTUNITY|机会
Science is expensive, but as quality declines, world markets will reward China for planting
better-tasting cultivars beginning with a replacement for CIFC 7963 which is losing its
resistance to CLR.
7
Source: Royal Botanic Garden, Kew; International Union for Conservation of Nature (IUCN); Dehong Tropical Agriculture
Research Institute of Yunnan (DTARI), Institute de Investivacao Cientifica Tropical (IICT), Portugal; Centro de Investigação das
Ferrugens do Cafeeiro (CIFC), Portugal.

8. TERROIR
水土
JENNY TONG CEO AT SP SPECIALTY COFFEE, GUANGZHOU
MAKES THE MOST OF CHINA’S EXCEPTIONAL TERROIR BY
KNOWING GROWERS AND SOURCING AT ORIGIN
― PHOTO COURTESY SP SPECIALTY COFFEE
Shade grown hard bean coffee cultivated at high altitude in good soil

9. |CHINA OFFERS HOPE|希望在中国
HOW THE WORLD BENEFITS FROM CHINA’S COFFEE
为什么世界需要中国咖啡
CHINA’S TERROIR (CONSISTENT QUALITY)
中国的水土环境
THE KING CULTIVAR (IMPROVED TASTE PROFILE)
小粒咖啡为王
THE COMPARATIVE EASE OF UPSLOPING (GREATER QUANTITIES)
提高种植的海拔相对容易
THE RESULT: COFFEE WITH CHINESE CHARACTERISTICS
9
Source: Intergovernmental Panel on Climate Change (IPCC); Royal Botanic Gardens, Kew; The International Center for Tropical
Agriculture (CIAT); International Union for Conservation of Nature (IUCN); Association for Science and Information on Coffee
(ASIC);World Coffee Research (WCR) and Anacafe

10. NATURALS|自然
“COFFEE IS ALL ABOUT THE EXPERIENCE
AND THE FEELING MORE THAN A
PARTICULAR TASTE. CONSUMERS WANT
TO DRINK SOMETHING THAT INSPIRES.”
― MANLAO RIVER ROASTER JOY CHEN
Experimental anaerobic (non-oxygen-requiring) fermentation

11. 11
|YUNNAN ARABICA |云南省小粒咖啡产量
Source: Seesaw Coffee, Shanghai (www.seesawcoffee.com) Yunnan International Coffee Exchange

12. XINZHAI
COFFEE MANOR
LUJIANGBA, BAOSHAN, YUNNAN
COFFEE PROCESSING AND STORAGE WITH HOTEL AND
MUSEUM, AUDITORIUM, TASTING ROOM, SUNKEN
COURTYARD AND RETAIL OUTLET.
― DESIGNED BY TRACE ARCHITECTURE OFFICE (TAO)
Bawan Village overlooks the Nuijiang Valley at Gaoligong Mountain

13. | CHINA’S GOOD FORTUNE |中国的好运
HOW CHINA BENEFITS AS A MEMBER OF THE GLOBAL COFFEE MARKET
中国如何使全球咖啡市场受益
MASTERING PRODUCTION AT SCALE
既有量，又有质
MARKET ACCESS
市场进入
RURAL EMPLOYMENT
农村就业
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THE GOAL: A FAIR COFFEE PRICE FOR CONSISTENT QUALITY

14. A REGIONAL TRADING CENTER ESTABLISHED IN 2014 TO SET
AND HELP GROWERS MEET QUALITY STANDARDS AND OBTAIN
INDEPENDENT, LESS VOLATILE PRICES FOR SPECIALTY COFFEE
― YUNNAN INTERNATIONAL COFFEE EXCHANGE
Hub for coffee research, training, and commerce.
MARKET ACCESS
GREATCOFFEESHOULDBE SHAREDWITHTHEWORLD
Dubai DMCC center will trade $100 million worth of Arabica
including imports from Yunnan State Farms Group
14

15. RURAL JOBS |农村就业
STARBUCKS’ CHINA FARMER SUPPORT CENTER (FSC) HAS
CERTIFIED 1,700 FARMS COVERING 16,000 HECTARES UNDER THE
C.A.F.E. PROGRAM AND TRAINED MORE THAN 17,0000 FARMERS
WITH PLANS TO TRAIN 50,0000 MORE BY 2023.
― CHINA FOUNDATION FOR POVERTY ALLEVIATION (CFPA)
CFPA Pilot program targets Conggang and Nankang in Baoshan prefecture
PhotocourtesyStarbucks/China

16. COFFEE
WITH CHINESE
CHARACTERISTICS
CHINESE LEAN
TOWARDS A
CLEAN, BALANCED,
AND FLORAL CUP
WITH A SOLID
AFTERTASTE.
HAVING SAID THAT
THOUGH, IT IS NOT
A HARD
PREFERENCE
― JOY CHEN
MANLAO RIVER
IN CHINA DELIVERY WILL DIFFERENTIATE SIMILARLY
PRICED AND PREPARED COFFEE OFFERINGS.
ANALYSTS ARE RIGHT WHEN THEY SAY CHINA
PRESENTS A HUGE OPPORTUNITY IN COFFEE, BUT
THE COMPETITION IS GETTING FIERCE.
― DAN BOLTON, STIR COFFEE AND TEA

17. |CHINA’S GOOD FORTUNE |中国的好运
OBSTACLE: INSUFFICIENT OUTLETS|危机
In several U.S. cities there are more than 48 coffee outlets per 100,000 residents. The U.S.
coffee shop market is valued at $45.4 billion. Japan is blanketed with 5.5 million vending
machines — 1 for every 23 people, the highest density worldwide. Sales total $60 billion
($650 million from coffee). Global RTD estimated at $3.1 billion in 2022.*
OPPORTUNITY|机会
In China coffee delivery will be responsible for expanding availability. Instead of traveling
to shops to enjoy coffee, many Chinese will have coffee delivered. Delivery initially will be
limited to urban areas with sufficient density to support shops at 2 kilometer intervals. China
has avoided the in-home dregs and will speedily leap from out-of-home coffee to enjoying
fine coffee in-home. Brewer sales of in-home brewers are growing by 23% and the
preference is for equipment to brew the best coffees.
Source: Alegra World Coffee Portal. Apartment Living Magazine, Euromonitor International 17

18. FIXED PRICE
18
OBSTACLE: LOW PRICES|危机
Colombia is attempting to fix green coffee
prices at levels no lower than the cost of
production. In Colombia this is $1.50 per lb.
This is in response to a desperate situation.
OPPORTUNITY|机会
Growers find a clear advantage in using fixed
pricing based on their cost of production, plus a
margin. Guaranteeing a margin encourages
farmers to focus on improving quality and
efficiencies and insures re-investment to make
their operation sustainable. Margins vary as do
costs but certification bodies suggest 30% is
sustainable

19. |CHINA’S GOOD FORTUNE |中国的好运
OBSTACLE: GLOBAL LEADERSHIP|危机
The U.S. has withdrawn from ICO. Again. The
decision forces austerity on the International
Coffee Organization—a small group of that the
industry relies on as an honest source of baseline
production and pricing data.
OPPORTUNITY|机会
Join ICO as a major coffee producer and
domestic consuming member. This will help restore
ICOs capability and enhance visibility and
reputation as a global leader while providing
access to a data set of strategic benefit.
19

20. THANK YOU
谢谢
Email
dan@stir-tea-coffee.com
Dan Bolton白大熊
Managing Editor
+1 (204) 230-7125
Skype: dwjbolton
WeChat: dwjbolton
20
大熊
“China is a remarkable coffee asset. In a time
of global crisis, when every coffee nation
must pull together to meet the challenges of
the inevitable, China has a destiny to lead.”
– Dan Bolton, STiR coffee and tea