Coffee commercialization and importance of the Chinese market for Buencafé

  1.   Chinese Market Overview

China has experienced steady growth and expansion in coffee consumption in recent years. Although tea and 3-in-1 drinks have traditionally been the preferred hot beverages, coffee is gaining popularity, especially among the young and urban population. This trend is due to several factors such as the influence of Western culture, the increase of the middle class entering the workforce, urbanization, and access to social media.

In the Chinese market, coffee plays an important role in Western consumption; its consumption grew by 10.3% in 2022 compared to 2021, and by 2024 it is expected to grow by 18% compared to 2023 (according to LMC). Furthermore, the current market leaders, such as Starbucks and Nestlé, have played an important role in the growth of the coffee culture in China and the expansion of the market; stronger brands such as Nescafé, ILY, Lavazza, Luckin and Starbucks are emerging.

  1.   Product and Packaging Innovation

The Chinese market is dynamic and constantly evolving, which has led to the introduction of diverse innovations in coffee-related products and packaging.  The consumption of instant coffee, bright coffee and coffee blends is on the rise given that they are both convenient and easy to prepare. Many established local brands, such as Satunbird, succeed in the single-dose capsule business with unique packaging, attractive and functional designs that adapt to the preferences of the Chinese consumer.

Single-dose capsule coffee machines have gained popularity in China, following a global trend. Companies such as Nespresso and other local brands have introduced capsule systems to make coffee quickly and easily at home or in the office.  Likewise, resealable, airtight and environmentally friendly packaging is gaining importance.

Ready-to-drink (RTD) coffee packaged in cans and plastic bottles, cold brew coffee bottles, cappuccinos and other flavored coffee beverages are also convenient for consumers on the go and suit the urban lifestyle.

As the population becomes more sophisticated in its consumption preferences, the market demand for specialty coffees and origin coffees increases. This has led to the introduction of premium and exclusive products in the market. Similarly, the introduction of coffee with functional ingredients, such as collagen supplements, herbs and other beneficial health ingredients, has been a trend aligned with the growing awareness of wellness.

  1.   How the Chinese market has been developing for Buencafé

Buencafé has been exporting to China for more than 10 years, starting with freeze-dried coffee and coffee extract as an ingredient for the industry. The business has evolved to retail product sales for major market players, both in physical and digital channels. 

The products we export to China are premium and stand out for their 100% Colombian origin, as consumers are more and more attracted to high-quality products, where our value proposition has had an interesting reception. Furthermore, we have made a commercial effort to position more and more the Café de Colombia (Colombian Coffee) logo through our packaged products, reinforcing its meaning and quality endorsement.

For Buencafé this market is strategic and therefore, we have been preparing ourselves to approach the market in a better way through the representative office in Shanghai and adopting a free trade zone model that allows us to have better supply chain solutions for our customers.

As a result of all this and many other factors, we expect to grow by 18% in this market in 2023 compared to 2022.

  1.   How did the COVID-19 pandemic affect coffee exports to China?

Although the pandemic affected coffee exports to China due to logistical reasons, it partially benefited us because the final consumer began to value and drink better quality coffee at home and to include it as an ingredient in other coffee-based products. As a result, our 100% Colombian freeze-dried coffee, which is a high-quality product, had an important increase in demand, which created a growth in Buencafé’s exports to China.

  1. What events do you believe have been crucial in opening the Chinese market to Colombian coffee in the last decade?

The Trade Fairs we have attended in recent years have been an important venue for understanding the market and identifying new customers. On the other hand, the fact that we have an office of the National Federation of Coffee Growers in China and staff dedicated to the commercialization of our products has also allowed us to have a real presence in the market, to be close to our clients and to harvest better results.

  1. Strategies for further market development.

Our core strategy is to stand out for the quality and 100% Colombian origin of our freeze-dried instant coffee. Consolidating the relationship with our allies in the area is an advantage that allows us to expand a portfolio of products specialized in the local consumer. Finally, we work daily to strengthen the recognition of the Café de Colombia (Colombian Coffee) logo, which is a source of pride for us and for the National Federation of Coffee Growers of Colombia.