Page 342 - 2022 White Paper on the Business Environment in China
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2 White Paper on the Business Environment in China
purchases saw the fastest growth, registering 60% heavily affected because the crop has a biennial
sales growth in 2020 and a 50% surge in the number plant cycle, whereby low-yield production one
of buyers. Among them, freeze-dried coffees and year is followed by bumper output in 2020. At
capsule coffees posted higher growth than coffee the same time, global coffee demand is picking
concentrates or drip coffees, despite the first two up in 2021 as global economies reopen following
varieties' average higher retail prices. Female pandemic turmoil. It has stimulated demand for
shoppers were three times more inclined to try out arabica, which is usually used in coffee shops
novel coffee products than conventional ones like and restaurants, unlike the lower grade robusta
instant coffee packages. Oat milk and other plant- favored for making instant coffee granules. Though
based dairy alternatives are fast rising to become conditions are ripe for high prices, commodity
the new darlings of coffee lovers who either suffer economist Philippe Chalmin said the cost of coffee
from lactose intolerance or simply want healthier has been particularly low in recent years. A pound
options. Nearly 90% of those who choose oat of arabica cost more than $3 in May 2011, Chalmin
milk are female customers, the survey found. For said. Coffee producers have experienced a very
offline coffee shops, customers are anticipating a long price crisis, said Valeria Rodriguez, head of
more comprehensive overall experience. The study advocacy and public engagement at the fair-trade
found that 72% of white-collar workers typically go association Max Havelaar. Four or five years from
to chain stores for cost-effective drinks that are 2021, most of them have been working at a loss. If
convenient and consistent in quality. Meanwhile, the crop is smaller, it means that there are coffee
other avant-garde coffee lovers normally aspire to producers somewhere in Brazil who will have no
the uniqueness discovered in standalone boutique coffee to sell, and therefore no income. The rising
shops, or immersive experiences both fun and prices are slowly being passed on to consumers.
photogenic. Also, delivery services have become This means that it will not be an immediate concern
a staple of life in China. The strategy to support a for Chinese consumers (Xinhua, “Coffee Prices
delivery service for single cups of low-price coffee Froth Up as Frost Hits Crops”).
was immediately accepted by local customers.
Nearly all major chain stores have adopted delivery Liquor
models, while concerns that transport may affect
coffee taste have been kept at bay (Wei). China's leading liquor brand Kweichow Moutai
said that its annual liquor output is expected to
The increase in coffee sales have also affected reach 55,300 tons in 2021. In 2020, the company's
prices in recent years. Coffee prices surged to revenue reached nearly 98 billion RMB ($15.4
multiyear peaks recently, extending stellar gains billion), a year-on-year increase of 10.29%, said Gao
in 2021 after frost damaged crops in the world's Weidong, chairman of the board, at the company's
biggest producer Brazil, a major trade partner. The 2020 annual general meeting of shareholders in
futures price for arabica coffee, one of Brazil's top July. The net profit attributed to shareholders of the
commodity exports, soared to just over $2 a pound parent company reached nearly 46.7 billion RMB
in mid-2021, the highest level since 2014. The price in 2020, an annual increase of 13.33%, said Gao.
has risen by 60% since January. Lower quality In March, the liquor maker set its revenue growth
robusta coffee, which is grown mainly in Asia, leapt target for 2021 at around 10.5% and planned
to an October 2017 peak of $1,993 a ton, capping to invest over 6.8 billion RMB in infrastructure
a near 40% gain in 2021. Several reasons explain construction 2021. A sorghum-based spirit, Moutai
the astronomical gains for coffee prices, mainly liquor is considered a luxury item in China (Xinhua,
the devastating weather conditions in Brazil. Mera “China’s Top Liquor Brand Forecasts Output at
also blamed soaring transportation costs and 55,300 Tons for 2021”).
political unrest in Colombia, the world's third-
largest producer. Brazil suffered a historic drought China has launched a national pilot zone to
earlier 2021. That was followed by damaging frosts develop premium wine on the edge of the Gobi
in July 29, 2021 at key plantations in Minas Gerais, Desert, aiming to turn the eastern foothills of Helan
a southeastern inland state that produces 70% of Mountain into China's Bordeaux. The National
the nation's arabica beans. Arabica has also been
342
purchases saw the fastest growth, registering 60% heavily affected because the crop has a biennial
sales growth in 2020 and a 50% surge in the number plant cycle, whereby low-yield production one
of buyers. Among them, freeze-dried coffees and year is followed by bumper output in 2020. At
capsule coffees posted higher growth than coffee the same time, global coffee demand is picking
concentrates or drip coffees, despite the first two up in 2021 as global economies reopen following
varieties' average higher retail prices. Female pandemic turmoil. It has stimulated demand for
shoppers were three times more inclined to try out arabica, which is usually used in coffee shops
novel coffee products than conventional ones like and restaurants, unlike the lower grade robusta
instant coffee packages. Oat milk and other plant- favored for making instant coffee granules. Though
based dairy alternatives are fast rising to become conditions are ripe for high prices, commodity
the new darlings of coffee lovers who either suffer economist Philippe Chalmin said the cost of coffee
from lactose intolerance or simply want healthier has been particularly low in recent years. A pound
options. Nearly 90% of those who choose oat of arabica cost more than $3 in May 2011, Chalmin
milk are female customers, the survey found. For said. Coffee producers have experienced a very
offline coffee shops, customers are anticipating a long price crisis, said Valeria Rodriguez, head of
more comprehensive overall experience. The study advocacy and public engagement at the fair-trade
found that 72% of white-collar workers typically go association Max Havelaar. Four or five years from
to chain stores for cost-effective drinks that are 2021, most of them have been working at a loss. If
convenient and consistent in quality. Meanwhile, the crop is smaller, it means that there are coffee
other avant-garde coffee lovers normally aspire to producers somewhere in Brazil who will have no
the uniqueness discovered in standalone boutique coffee to sell, and therefore no income. The rising
shops, or immersive experiences both fun and prices are slowly being passed on to consumers.
photogenic. Also, delivery services have become This means that it will not be an immediate concern
a staple of life in China. The strategy to support a for Chinese consumers (Xinhua, “Coffee Prices
delivery service for single cups of low-price coffee Froth Up as Frost Hits Crops”).
was immediately accepted by local customers.
Nearly all major chain stores have adopted delivery Liquor
models, while concerns that transport may affect
coffee taste have been kept at bay (Wei). China's leading liquor brand Kweichow Moutai
said that its annual liquor output is expected to
The increase in coffee sales have also affected reach 55,300 tons in 2021. In 2020, the company's
prices in recent years. Coffee prices surged to revenue reached nearly 98 billion RMB ($15.4
multiyear peaks recently, extending stellar gains billion), a year-on-year increase of 10.29%, said Gao
in 2021 after frost damaged crops in the world's Weidong, chairman of the board, at the company's
biggest producer Brazil, a major trade partner. The 2020 annual general meeting of shareholders in
futures price for arabica coffee, one of Brazil's top July. The net profit attributed to shareholders of the
commodity exports, soared to just over $2 a pound parent company reached nearly 46.7 billion RMB
in mid-2021, the highest level since 2014. The price in 2020, an annual increase of 13.33%, said Gao.
has risen by 60% since January. Lower quality In March, the liquor maker set its revenue growth
robusta coffee, which is grown mainly in Asia, leapt target for 2021 at around 10.5% and planned
to an October 2017 peak of $1,993 a ton, capping to invest over 6.8 billion RMB in infrastructure
a near 40% gain in 2021. Several reasons explain construction 2021. A sorghum-based spirit, Moutai
the astronomical gains for coffee prices, mainly liquor is considered a luxury item in China (Xinhua,
the devastating weather conditions in Brazil. Mera “China’s Top Liquor Brand Forecasts Output at
also blamed soaring transportation costs and 55,300 Tons for 2021”).
political unrest in Colombia, the world's third-
largest producer. Brazil suffered a historic drought China has launched a national pilot zone to
earlier 2021. That was followed by damaging frosts develop premium wine on the edge of the Gobi
in July 29, 2021 at key plantations in Minas Gerais, Desert, aiming to turn the eastern foothills of Helan
a southeastern inland state that produces 70% of Mountain into China's Bordeaux. The National
the nation's arabica beans. Arabica has also been
342
