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Coffee in China: Market Trend and Consumer Demand

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Coffee in China: Market Trend and Consumer Demand University of Kentucky UKnowledge Theses and Dissertations--Agricultural Economics Agricultural Economics 2016 COFFEE IN CHINA: MARKET TREND AND CONSUMER DEMAND Jesse W. Mattingly University of Kentucky, [email protected] Digital Object Identifier: http://dx.doi.org/10.13023/ETD.2016.083 Right click to open a feedback form in a new tab to let us know how this document benefits ou.y Recommended Citation Mattingly, Jesse W., "COFFEE IN CHINA: MARKET TREND AND CONSUMER DEMAND" (2016). Theses and Dissertations--Agricultural Economics. 37. https://uknowledge.uky.edu/agecon_etds/37 This Master's Thesis is brought to you for free and open access by the Agricultural Economics at UKnowledge. It has been accepted for inclusion in Theses and Dissertations--Agricultural Economics by an authorized administrator of UKnowledge. For more information, please contact [email protected]. STUDENT AGREEMENT: I represent that my thesis or dissertation and abstract are my original work. Proper attribution has been given to all outside sources. I understand that I am solely responsible for obtaining any needed copyright permissions. I have obtained needed written permission statement(s) from the owner(s) of each third-party copyrighted matter to be included in my work, allowing electronic distribution (if such use is not permitted by the fair use doctrine) which will be submitted to UKnowledge as Additional File. I hereby grant to The University of Kentucky and its agents the irrevocable, non-exclusive, and royalty-free license to archive and make accessible my work in whole or in part in all forms of media, now or hereafter known. I agree that the document mentioned above may be made available immediately for worldwide access unless an embargo applies. I retain all other ownership rights to the copyright of my work. I also retain the right to use in future works (such as articles or books) all or part of my work. I understand that I am free to register the copyright to my work. REVIEW, APPROVAL AND ACCEPTANCE The document mentioned above has been reviewed and accepted by the student’s advisor, on behalf of the advisory committee, and by the Director of Graduate Studies (DGS), on behalf of the program; we verify that this is the final, approved version of the student’s thesis including all changes required by the advisory committee. The undersigned agree to abide by the statements above. Jesse W. Mattingly, Student Dr. Wuyang Hu, Major Professor Dr. Carl Dillon, Director of Graduate Studies COFFEE IN CHINA: MARKET TREND AND CONSUMER DEMAND THESIS A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in Agricultural Economics in the College of Agriculture, Food and Environment at the University of Kentucky By Jesse Wayne Mattingly Lexington, Kentucky Director: Dr. Wuyang Hu, Professor of Agricultural Economics Lexington, Kentucky 2016 Copyright © Jesse Wayne Mattingly 2016 ABSTRACT OF THESIS COFFEE IN CHINA: MARKET TREND AND CONSUMER DEMAND Although it remains a tea consuming nation, both production and consumption of coffee in China has been increasing at double-digit rates and is not expected to slow down (International Coffee Organization (ICO), 2015). With investments and upward trends in production and rapid increases in consumption of coffee in China it is important for producers and retailers of the bean1 in China to understand the new Chinese coffee consumer. Using survey data from Wuhan, China we help understand the Chinese coffee consumer by explaining their consumption using standard OLS regression. Results show that whether or not consumers make/brew their own coffee, how long consumers have been consuming coffee regularly, the size of the coffee cup most often purchased and individuals’ prediction of their coffee consumption in the following year are all important in explaining Chinese coffee consumption. We suggest for long-run success, that Chinese coffee producers and retailers in China focus on the quality of their coffee bean. KEYWORDS: Consumption, Coffee, China, Wuhan, OLS Jesse Wayne Mattingly April 27, 2016 1 ‘bean’ refers to coffee COFFEE IN CHINA: MARKET TREND AND CONSUMER DEMAND By Jesse Wayne Mattingly Dr. Wuyang Hu Director of Thesis Dr. Carl Dillon Director of Graduate Studies April 27, 2016 To my loving parents, Ron and Diane Mattingly of Louisville, Kentucky ACKNOWLEDGEMENTS I would like to thank Dr. Wuyang Hu for doing everything he could to make my experience as a Master’s student exceptionally rewarding and complete. Thank you for being not only a great advisor, but also a dear friend of mine. Without your help, which was beyond what is expected from an advisor, I would not have been able to have an unforgettable experience in China and a successful Master’s career. Furthermore, I would like to think Dr. Michael Reed and Dr. Sayed (Mehdi) Saghaian for agreeing to serve on my thesis committee. Thank you all for all of your comments, suggestions, and work. Thank you to Dr. Hopkins and Dr. Bhakhri for their tremendous efforts and support in helping me complete my thesis. I would like to thank Karen Pulliam for her technical assistance. My parents, Ron and Diane Mattingly, have always laid the foundation for me to succeed in all my endeavors in life. This foundation consists of continuous love, patience and support needed to achieve goals in life. Mom and Dad, words are not sufficient in explaining how much I thank you all. I thank my parents, along with the Opie family, William, Brooke, Aza, and Zeah & Zyla for being patient with me, especially during my graduate studies. I love you all. I would like to thank Leito Lezcano for providing me with the knowledge I have about coffee farming. Because of Leito, I was able to tell a good story about coffee in my thesis. Furthermore I would like to thank Leito and his wife, Lely Miranda, Gaspar, Raquel, Nathalie, Xavier, Stephanie, Raciel, and the Sanchez family for their love. iii TABLE OF CONTENTS ACKNOWLEDGEMENTS ............................................................................................... iii LIST OF TABLES ............................................................................................................. vi LIST OF FIGURES .......................................................................................................... vii CHAPTER 1: INTRODUCTION ....................................................................................... 1 1.1 Research Motivation ................................................................................................. 1 1.1.1 What is coffee? ................................................................................................... 1 1.1.2 Coffee, a New Concept in the Traditional Tea Consuming China ..................... 2 1.2 Objective and Outline of Paper ................................................................................. 5 CHAPTER 2 BACKGROUND .......................................................................................... 6 2.1 Movements in Coffee Production and Consumption Worldwide ............................. 6 2.2 Movements in Coffee Production and Consumption in China ............................... 10 2.3 Why Wuhan was Selected ....................................................................................... 15 CHAPTER 3: LITERATURE REVIEW .......................................................................... 16 3.1 Role of Coffee Production ....................................................................................... 16 3.2 Role of Coffee Price and Consumption ................................................................... 17 3.3 Past Studies on Household Beverage Consumption ............................................... 18 CHAPTER 4: DATA ........................................................................................................ 21 4.1 Data Collection ........................................................................................................ 21 4.2 Design of Survey ..................................................................................................... 21 4.3 Descriptive Statistics ............................................................................................... 22 CHAPTER 5: METHODOLOGY .................................................................................... 36 5.1 Theoretical Framework ........................................................................................... 36 5.2 Missing Data and Multiple Imputation ................................................................... 38 5.2.1 What is Multiple Imputation? ........................................................................... 38 5.2.2 How we Utilized Multiple Imputation .............................................................. 39 5.3 Empirical Model ...................................................................................................... 40 CHAPTER 6: RESULTS .................................................................................................. 40 6.1 OLS Regression Results and Interpretations ........................................................... 40 CHAPTER 7: CONCLUSION ......................................................................................... 51 7.1 Implications ............................................................................................................. 51 7.2 Limitations and Future Research ............................................................................. 55
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