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                                              Close look at world coffee beans trade: China potential
                  According to the International Coffee Organization numbers are so:  October 2016, coffee export reached 9 mil-
              lion 130 thousand bags, about 547800 tons (60 kg / bag), compared to the same period last year: with the difference
              of 280 thousand bags. Arabica export volume shows good results with 71 million 930 thousand bags, 2 million 720
              thousand bags more than last year; while Robusta export significantly reduced, 3 million 450 thousand bags last year.
              Coffee beans production                          situation has developed imbalance between demand
                                                               and supply in past two years, where demand exceeds
                  This year coffee production exceeded last years’   supply. So earlier produced reserves partly satisfy
              by 1 million 400 thousand bags. Brazil is still one of   market needs now.
              the leading coffee producing countries, followed by
              Vietnam and its high Robusta production.

                  65%

                  60%
                  55%
                  50%
                  45%                                             Year
                  40%                                          -3.3 million 60kg bags. Esitimated deficit between production and con-
                                                               sumption in 2015/16
                  35%
                      08/090  9/10  10/111  1/12  12/131  3/14  14/151  5/16  16/17
                                  Arabica  Robusta            Has China become a market with the biggest
              Arabica and Robusta production scale in 2008-2016, taken from USDA.  consumer potential?
                  As we see from the diagram, even though Arabica   According to the statistics of the London International
              is much picky to an environment and soil, it is still   Coffee Organization, compared to the global average growth
              much more demanded in the market than Robusta, this   of 2%, China consumption rate rapidly grows 15% every
              year ratio is close to 7:3.
                                                              year, indicating big opportunities for Chinese coffee
                                                              industry. In general, China coffee consumption is much
              Coffee beans consumption:  Does demand ex-
              ceed supply?                                    less than European, but from business development point
                                                              of view, China might be the most potential coffee drinking
                                                              country. According to the forecasts, if every China citizen
                  Global coffee consumption this year has grew for   drinks one cup of coffee a day, coffee market here will
              1 million 900 thousand bags, comparing to last year;   reach 50 billion annual profit, so the entire producing
              total consumption reached 151.3 million bags, which   chain will create hundred billion USD market.
              is about 9078000 tons.
                                                                China coffee consumption potential  cup/person/year



                                                                 USA:500            FL/SE:1000          JPN:200          CHN:20


                                                                   Nowadays, fresh coffee consumption is 87%,
                        145.4  150.9  147.0  152.1  149.4  146.6  151.3  148.0  while instant coffee hardly gets to 13%. In China in-
                                                               stant coffee has a lion share of market, which is 87%,
                 Year
                                                               while fresh coffee has only 16%. In contrast, domestic
                                       ▇ consumption;▇ production
                                                               instant coffee market size is not keeping up with fresh
                  Coffee industry consumption in 2014-2015 was   coffee market, mainly because customers’ preferences
              higher than the output. In the 2015/16, production   have changed: now they tend to buy more coffee beans
              and sales deficit has reached 3 million 300 thousand   and go to coffee shops. Instant coffee growth is ex-
              bags. This means that 2012 and 2013 coffee oversupply   pected to drop by 8.3% in 2012-2017.



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