Starbucks latest investment targets China’s urban middle class

March 20, 2020

1 mins read

Average Vietnamese robusta prices rose moderately from $1.62/kg in January to $1.68/kg  in mid-March. Mintec expects firm demand fundamentals over the coming months, with the coronavirus pandemic supporting demand for instant household blends. The latest Vietnamese robusta price represents 5% y-o-y growth and 3% q-o-q growth with China the major buyer.

On 13 March, Starbucks unveiled plans to construct a new, modern coffee roasting factory in its second largest market, China. The $130 million state-of-the-art plant will include facilities for roasting, storage and distribution, in line with plans to grow its Chinese footprint. The latest announcement underlines Starbucks’ commitment to bolster China’s specialty coffee industry with 6,000 stores targeted by 2022, against approximately 4,000 stores at present.

Despite being a predominantly tea-drinking nation, China is developing its taste for coffee, with an increasingly affluent population replicating western consumption habits. Chinese consumption is small by global standards (according to China Briefing, Business Intelligence, the average Chinese person consumes four cups of coffee annually, compared to 441 cups per American). However, with its large population and burgeoning middle class, China is a potential high-vale market. Robusta imports, mainly from Vietnam, currently comprise approximately 80% of Chinese consumption according to trade statistics. Starbucks hopes to increase local demand for higher margin arabica-based blends.

 

ibi
Ibi Idoniboye

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