Can Chinese coffee beans win international "big shots"? Pu'er exploration: "coffee" competition varieties | coffee | coffee beans

Coffee has become a must-have for many working people to wake up and refresh their minds. But most people are unaware that their coffee may come from Yunnan, rather than traditional coffee producing countries such as Colombia and Jamaica.

In fact, Yunnan, which shares the golden belt of coffee cultivation with these countries, is ushering in the golden age of coffee beans——

This year, Yunnan coffee beans, which were previously purchased at prices lower than the New York coffee futures price, experienced a price explosion: each kilogram of Yunnan coffee beans was about 10 yuan higher than the New York futures price, setting a new historical high for the purchase price of Yunnan coffee beans. The purchase price of coffee beans has increased from only 13-14 yuan per kilogram in 2018 and 2019 to 37-38 yuan per kilogram now. In the past five or six years, Yunnan coffee beans have shown a beautiful upward trend.

In addition, well-known domestic and foreign coffee chain brands such as Starbucks, Nestle, Luckin Coffee, Manner, Seesaw, and M Stand have also launched multiple Yunnan coffee bean products in recent years. Zhejiang merchants, who have a keen sense of business, are also starting to enter the Yunnan coffee industry.

Why are Yunnan coffee beans, which have only served as supporting role for many years, now being "scrambled" by major brands? Besides the emotional slogan of "supporting domestic products", what other paths does Yunnan coffee have to take after the fire? Recently, a journalist from Chao News visited Pu'er, Yunnan, known as the "coffee capital of China", to explore the answer.

Zhejiang Merchants Luozi Pu'er Coffee

Walking on the rugged slopes of Pu'er countryside, the most common ones are dense coffee trees and signs of "Pu'er coffee quality and efficiency improvement experimental sites". Under the palm sized green leaves, clusters of verdant coffee fruits grow together, making it look stunning under the sunlight. Upon closer inspection of the coffee fruit, the unexpected aroma of coffee did not hit the face. After peeling it, there was a hint of green grass. The real coffee beans can only be seen after removing the outer skin, flesh, pectin, and inner skin.

It is said that Chinese coffee looks at Yunnan because 98% of coffee beans in China are produced in Yunnan. Nearly half of Yunnan's coffee bean production comes from Pu'er. As the coffee producing area with the largest planting area, highest yield, and best quality in China, Pu'er has nearly 700000 acres of coffee fields. In 2022, the production of green beans in Pu'er coffee was over 50000 tons.

"In November and December, when the coffee fruit turns red, it means it can be picked. The picking season usually ends in March," said Zhang Yong, the head of the Market Brand Department at the Pu'er Tea and Coffee Industry Development Center. In the past one or two years, at this time, almost all mainstream coffee brands' bean seekers or relevant leaders will appear on the streets of Pu'er. There are also brands that have just finished their previous season and have already booked coffee beans for the next season. Such a scene was unimaginable five or six years ago.

Liu Haifeng, Executive Vice General Manager of Yunnan International Coffee Trading Center, also noticed the increasing popularity of Pu'er coffee beans amidst changes. "Ten years ago, Yunnan coffee bean sales were in the buyer's market. After the buyer paid a deposit, the seller would first deliver the goods to the buyer. Now it has become a seller's market, and the vast majority of buyers will directly come to Yunnan to pay the full amount before picking up the goods." Liu Haifeng said, another change is reflected in the market side. In 2014, I conducted research at coffee shops in Shanghai but couldn't find a coffee named after Yunnan coffee. Not long ago, when he went on a business trip to Shanghai again, he found that an international chain coffee brand had already erected a sign outside the store saying "Yunnan coffee is very popular".

The popular coffee beans have confirmed the old saying that "without Zhejiang, there is no market" in Pu'er. Although Pu'er and Zhejiang are separated by more than 2000 kilometers, Chao News reporters found during their interviews in Pu'er that Zhejiang enterprises with a keen sense of business have begun to establish their presence in the Pu'er coffee industry.

As soon as they walked into the coffee processing plant of Yutianchuan Coffee, an official coffee exclusive supplier for the Hangzhou Asian Games and a Zhejiang enterprise located in Ning'er County, Pu'er, Chao News reporters were surrounded by the sound of machine operation and the burnt aroma of coffee.

"We just started construction early last month and are expected to have an annual production capacity of up to 2000 tons," said the person in charge of the Yutianchuan Coffee Ning'er Coffee Processing Plant. This is the second chess piece set by Yutianchuan Coffee in Pu'er. A year ago, Yutianchuan Coffee established a coffee sales live streaming base in Pu'er, achieving sales of 147 million yuan in the first half of the year.

"Last year, we used Yunnan coffee beans to create public welfare licensed coffee and Asian Games trendy coffee for the Hangzhou Asian Games. This year's Hangzhou Asian Games, we will continue to use Yunnan coffee beans to bring more surprises to the public," the person in charge also told Chao News reporters.

In Pu'er, opening a coffee shop has also become a good business for young people. According to the registration data of the business license of the Market Supervision Bureau of Simao District, Pu'er City, the number of coffee shops in Simao District has increased from 25 in 2020 to over 150 in 2023.

"This year's Spring Festival, we can sell 600 cups of coffee per day in a single store, and at least 100 cups per day during the Dragon Boat Festival." Yang Fan, a barista at the "Yicao Alley" coffee shop located in Daijia Lane, a century old street in Pu'er, told Chao News reporters that although it has been open for more than 2 years and has caught up with the epidemic, the coffee shop is still profitable.

Coffee farmers, who were discouraged by the low prices of coffee beans in the past few years, have also regained their enthusiasm for growing coffee trees. Liu Jiansong, a coffee farmer living in Liushun Town, Pu'er, has been dealing with coffee trees for 20-30 years. "In those years when the price of coffee beans was low, we even had to take out loans to fertilize the coffee trees, let alone make money. We wanted to cut down the coffee trees, but hiring someone to cut them down also cost money, and many coffee fields were simply abandoned." Liu Jiansong said, starting from the year before last, the income from growing coffee has significantly increased. Last year, I harvested 20 tons of coffee beans and earned a net profit of 70-80000 yuan.

Nowadays, Liu Jiansong, who only has a junior high school education, has developed a habit of drinking a cup of sun flavored hanging ear coffee every morning, and then watching the coffee futures prices and related news in New York. "Yunnan's coffee beans are becoming increasingly famous. When I save up 300000 yuan of capital, I want to start a business in coffee bean circulation, so now I need to pay attention to the changing trends in international coffee prices."

Why Yunnan coffee beans stand at the forefront of the industry

As Yunnan coffee beans become increasingly popular, people realize that Yunnan has a history of over 100 years of coffee cultivation. They can't help but wonder why Yunnan coffee beans have only reached the forefront of the industry after being popular for many years.

In fact, in the past few years, Yunnan coffee beans have been able to only sell low profit coffee beans due to the use of extensive planting methods and insufficient downstream processing support, and the price has always been slightly lower than the New York futures price, and has been labeled as "low quality price difference". There has even been a saying circulating outside that coffee beans in Yunnan have good quality only when they are grown on trees, and not necessarily when picked.

Liu Haifeng said that the combination of these unfavorable factors has left Yunnan coffee in a low-end state for a long time. Of course, many coffee brands also purchase low-priced Yunnan coffee beans, but they are mainly used to mix and match with high-quality foreign coffee beans to reduce costs.

The main reason for Yunnan's resurgence this time is that the Chinese coffee market has entered a stage of rapid development. The 2021 Yunnan Coffee Industry Development Report compiled by the Yunnan Coffee Industry Expert Group pointed out that in 2021, the consumption scale of China's coffee market reached 381.7 billion yuan, becoming the eighth largest consumer market in the world after the European Union, the United States, Brazil, Japan, the Philippines, Canada, and Indonesia. According to a report from CCTV Finance on June 30th, e-commerce platform data shows that from April to June this year, domestic coffee group purchase orders increased by 250% year-on-year. Experts predict that the national coffee market size may exceed 1 trillion yuan by 2025.

In addition, multiple industry insiders have analyzed that in the past three years of the epidemic, there have been difficulties in the import and transportation of foreign coffee beans, and the significant increase in demand for domestic coffee beans in the domestic coffee industry has also brought development opportunities to Yunnan coffee beans.

"In 2022, the Chinese market consumed 280000 tons of coffee, with an average consumption of 20 cups per person. However, the total production of coffee beans in Yunnan is only 110000 tons, and some of them will be exported to foreign countries." Liu Haifeng said that for Yunnan coffee beans, the huge market demand has opened up, but whether they can catch up with this "flow" still depends on "internal efforts.".

During the long dormant period, Yunnan's coffee industry has gradually shifted towards scale, mechanization, and standardization. In the exhibition hall of Yunnan International Coffee Trading Center, a coffee bean competition that has lasted for 11 years occupies the most prominent position, showcasing the "advanced" process of Yunnan coffee beans to visitors at home and abroad. In order to find the best coffee beans in Yunnan, Pu'er has been holding the Pu'er Coffee Bean Competition since 2013. Three years later, the competition was upgraded to the Yunnan Coffee Green Bean Competition, with international coffee tasters as judges. But at the beginning, only half of the coffee beans sent to the competition met the standards for high-quality beans required by the competition. This year, 95% of the coffee beans participating in the competition met the standards for premium beans. The overall score of the participating coffee beans has also increased from 78 points to 82 points year by year. For coffee beans, these 5 points are the gap between regular beans and premium beans. Yunnan coffee beans with a score of 82 or above can now compete with international premium coffee beans.

"More than a decade ago, when we came to Yunnan as a medicinal base, we unexpectedly discovered that the climate and soil in Yunnan were very suitable for planting coffee trees. However, the quality of the coffee beans produced locally at that time was not high, and there was great potential to be tapped. Therefore, we explored the establishment of boutique coffee plantations and coffee bean processing plants based on the quality concept of the entire process of making medicine." Yao Jianlong is the general manager of Yunnan Lanpo Coffee Co., Ltd., a subsidiary of the Conway Group, and his phone has various photos of coffee plantations. Over the years, he has been stationed at the coffee plantation located in Lancang County, Pu'er, to control the quality of coffee beans during the coffee fruit ripening season.

Photo by Wu Yue, journalist from Lampo Coffee Estate

Yao Jianlong is also a witness to the improvement of the Pu'er coffee industry. He told Chao News reporters that when he first came to Pu'er, besides international coffee brands such as Nestle and Starbucks, he would purchase coffee beans in Pu'er, and rarely saw domestic coffee brands choose Pu'er. But in recent years, Pu'er has gathered a group of well-known domestic coffee brand acquisition stations and processing plants. Because everyone realizes that quickly connecting the production and planting sources of the coffee industry is a strategic competitive measure.

For example, the joint venture between Yutianchuan Coffee and Pu'er is seen by the capital market as an important signal for Yutianchuan Coffee to take the lead in laying out high-quality domestic industrial chains, increasing production capacity and industrial chain construction, and helping it obtain financing worth hundreds of millions of yuan in Series C.

Behind "Fury": What other cards can Yunnan Coffee play

In Yunnan, there have been two different voices regarding the booming development prospects of Yunnan coffee beans.

Optimists believe that with the rise of China-Chic's economy and the increase in the rate of high-quality coffee in Yunnan, drinking a cup of Yunnan coffee has become a common feeling of Chinese people. Moreover, the average person in Japan and South Korea drinks over 200 cups of coffee per year, while the average person in China only drinks 20 cups per year, indicating that Yunnan coffee still has a huge market space in China.

The rationalists have provided several other sets of data - Yunnan coffee beans have shortcomings in deep processing, leading to Yunnan coffee being mainly exported as raw materials. But some coffee industry platforms have calculated that the distribution of benefits in the three main links of upstream planting, midstream deep processing, and downstream circulation in the entire coffee industry chain accounts for 1%, 6%, and 93%, respectively. For example, one kilogram of coffee beans can make over 50-70 cups of coffee, but with Yunnan's record high coffee bean prices, one kilogram of coffee beans can only buy one cup of coffee.

Compared with traditional coffee producing regions such as Africa and Central and South America, Yunnan's labor costs are several times higher. According to the Southeast Asian Research Institute of Yunnan Academy of Social Sciences, the harvesting cost of 1 kilogram of green beans is at least 15 yuan. With the easing of the epidemic, a large number of Brazilian coffee beans have entered the country, and their prices are lower than those in Yunnan.

The person in charge of the Yutianchuan Coffee Ning'er Coffee Processing Plant found that it is difficult to find talent for deep processing of local coffee. He pointed to a globally leading coffee processing equipment in the production room of the coffee processing plant and sighed. With advanced technology, he realized that the company could not recruit technical personnel who could operate the equipment locally, and could only spend more energy importing from Hong Kong and Taiyuan.

"In the fierce competition of the coffee market, the problem of low coffee bean value has become a bottleneck that Yunnan coffee planting industry must break through." Several industry insiders expressed their concerns in an interview with Chao News reporters: in addition to the emotional slogan of "supporting domestic products", what other cards can Yunnan coffee continue to thrive in the fierce competition of the coffee market?

From the various data of Yunnan coffee, Chao News reporters saw three obvious explorations: developing high-quality coffee beans in the upstream raw material end, developing deep processing of coffee beans in the midstream processing end, and establishing Yunnan coffee's reputation in the downstream brand end.

The coffee shop opened by the second generation of Yunnan coffee in Shanghai, born in the 2000s, only sells Yunnan coffee

For example, in 2014, when Yunnan's premium coffee beans were just starting out, the premium bean production area only accounted for 1%. In 2022, the proportion of high-quality coffee beans in Yunnan has increased to 8%, and the deep processing rate of coffee has also reached 20%. In August last year, the Yunnan Provincial Department of Agriculture and Rural Affairs, the Provincial Department of Finance, and the Provincial Department of Industry and Information Technology jointly issued the "Several Policy Measures to Promote the Improvement of Coffee Quality and Deep Processing Rate", which clearly stated that by 2024, the province's coffee bean quality rate will reach 30% and the coffee deep processing rate will reach 80%.

"To create high-quality coffee beans, coffee varieties are also very important. Currently, the main coffee varieties planted in Yunnan are the Katim series varieties, which have the advantages of disease resistance and high yield. However, after long-term cultivation, this variety gradually shows signs of decline. After years of breeding, there are dozens of small grain coffee varieties with stronger disease resistance and better quality in Yunnan." Li Xuejun, Vice Dean of the School of Tropical Crops at Yunnan Agricultural University, told Chao News reporters that the university has collected and preserved more than 220 coffee germplasm resources. It is expected that within 5-10 years, through hybridization, mutation, molecular breeding and other methods, more coffee varieties with better quality and yield performance and more suitable for Yunnan cultivation will be screened. In addition, Yunnan Agricultural University is also applying for the "Coffee Science and Engineering" program, hoping to provide more professional talents for the development of Yunnan's coffee industry.

Liu Haifeng is more concerned with industrial brand building. "Although Yunnan coffee has established a reputation in the industry, its popularity on the consumer end is not strong enough due to the lack of a sufficiently large brand." Liu Haifeng said that the integration of coffee and tourism may pave a new path. For example, developing high-quality coffee culture tourism routes and coffee themed homestays. In 2023, Pu'er will focus on building more than 10 popular boutique specialty coffee estates, and develop towards the integration of boutique estates.

How to enhance the discourse power of Yunnan coffee in the struggle for "coffee" status? We still need to wait and see.