Coffee Market in China: Trends & Consumer Strategies

Coffee Market in China: Trends & Consumer Strategies A Coffee industry Market Research of a Traditional Tea-Drinking Country Zhang Nan Universidad Politécnica de Valencia Facultad de Administración y Dirección de Empresa Máster Universitario en Gestión de Empresas, Productos y Servicios Trabajo Fin de Master (Académico) Tutor: María del Rosario de Miguel Molina 30 de junio de 2014 Abstract With the rapid development of China economy, the coffee market is now soaring and more and more companies are going to join it. To get a clear sight and some ideas of the market, here comes the paper. This paper consists of 8 chapters, an overview of International and domestic coffee market about coffee production and consumption will be given, meanwhile, the status and development prospects of coffee industry in China are briefly summarized. However, coffee in China is still a trend more than a habit, people drink it to feel good, but not out of need. Coffee culture is beginning to be accepted and appeals to the adventurous, open-minded, young, affluent, urban consumers in cities like Shanghai, Beijing, and Guangzhou. This paper also gives a deep analysis of Chinese customers’ coffee buying behavior, consumption values and Chinese coffee culture, which is more like a symbol of modern and successful lifestyle than the culture created by western people hundreds years ago. In China, coffee culture represents a young, emerging middle class and their growing purchase power instead of blends, tastes, and brewing techniques. With the rising of Chinese people’s living standard and continuously development of domestic coffee market, it is believed that China, this traditional tea-drinking country could also becomes one of the world largest coffee consumption countries in future. Keywords: Coffee industry, Coffee culture, Tea culture, Coffee consumption behavior. Acknowledgements I would like to express my special appreciation and thanks to my advisor Professor María de Miguel Molina, who taking the time to give me valuable feedback, tips and support. Moreover, I would also like to express my gratitude to my family, my mother and father, without their support I could not finish my study. At last but not least, I would like to take this opportunity to thank my friends Shen Meng, Wang Yongkai, Wei Wei and Zhu Zheng, who help me a lot in supporting my writing and incented me to strive towards my goal. TABLE OF CONTENTS LIST OF FIGURES ........................................................................................................................................................... I LIST OF TABLES .......................................................................................................................................................... III LIST OF ABBREVIATIONS ....................................................................................................................................... IV CHAPTER 1 INTRODUCTION ................................................................................................................................... 1 1.1 REASONS FOR TOPIC CHOOSING .................................................................................................................................................. 1 1.2 THEORETICAL BASIS (ACADEMIC LITERATURE REVIEW) ....................................................................................................... 2 1.2.1 Chinese Customer Behavior (Economical view) ....................................................................................................... 3 1.2.2 Coffee culture & Tea culture (Sociological view) ..................................................................................................... 9 1.2.3 Different Strategy need to be used considering different cultural influences (Marketing view) ...... 11 1.2.4 Conclusion of literature review ...................................................................................................................................... 14 1.3 METHODOLOGY ............................................................................................................................................................................ 18 1.4 OBJECTIVES ................................................................................................................................................................................... 19 1.4.1 The problem indication ..................................................................................................................................................... 19 1.4.2 The research questions ...................................................................................................................................................... 20 CHAPTER 2 COFFEE INDUSTRY OVERVIEW ................................................................................................ 21 2.1 INTRODUCTION TO COFFEE ........................................................................................................................................................ 21 2.1.1 Coffee Origen and History ................................................................................................................................................. 21 2.1.2 The Introduction of Coffee into China ......................................................................................................................... 23 2.2 INTERNATIONAL COFFEE MARKET ANALYSIS ........................................................................................................................ 24 2.2.1 World Coffee Plantation & Production ....................................................................................................................... 24 2.2.2 Coffee Sales & Price ............................................................................................................................................................. 27 2.2.3 Coffee Industry Value Chain ............................................................................................................................................ 29 2.3 CHINA MACROECONOMIC ENVIRONMENT ANALYSIS (PEST ANALYSIS) ......................................................................... 32 2.3.1 Political Factors .................................................................................................................................................................... 33 2.3.2 Economic Factors ................................................................................................................................................................. 33 2.3.3 Social Factors ......................................................................................................................................................................... 40 CHAPTER 3 CHINA COFFEE RAW MATERIAL MARKET ANALYSIS .................................................. 42 3.1 COFFEE BEANS PRODUCTION IN CHINA .................................................................................................................................. 42 3.2 CHINA COFFEE IMPORTATION ................................................................................................................................................... 46 3.3 CHINA COFFEE EXPORTATION ................................................................................................................................................... 51 3.3.1 Volume and Structures of Coffee Exports .................................................................................................................. 51 3.3.2 Main Destinations of Coffee Exports by China ......................................................................................................... 53 3.3.3 Trade Balance of Coffee ..................................................................................................................................................... 54 CHAPTER 4 CHINESE COFFEE CUSTOMER MARKET ECONOMIC ANALYSIS .............................. 55 4.1 CHINESE COFFEE CUSTOMER MARKET ECONOMIC OVERVIEW .......................................................................................... 55 4.2 COFFEE CONSUMPTION IN CHINA ............................................................................................................................................. 56 4.2.1 Consumption ........................................................................................................................................................................... 56 4.2.2 Characteristics of Demand ............................................................................................................................................... 58 4.2.3 Supply & Demand Balance ............................................................................................................................................... 65 4.3 SALES CHANNEL ........................................................................................................................................................................... 66 4.3.1 Traditional Sales Channel ................................................................................................................................................ 66 4.3.2 Coffeehouse ............................................................................................................................................................................. 66 4.3.3 China coffee on-line market ............................................................................................................................................

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