Feb 16 / Natália Gandolphi

Coffee Weekly Report - 2024 02 16

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  • Recent export data reveals China as a key importer of Brazilian coffee, maintaining its 6th position in January.

  • Despite constituting 4% of Brazil's coffee exports, China's import surge, initiated in the second half of 2023 by diverting imports from Ethiopia, poses a challenge to traditional destinations. This shift is driven by differentials and positions China as a potential major coffee destination over the next years.

  • Factors influencing China's coffee market include a production shift to net importing since the 10/11 cycle and low per capita consumption (0.21kg annually) compared to the global average (1.3kg).

  • Chinese supply and demand dynamics strengthen with predominant arabica production, a close 50/50 split in internal consumption between roast & ground and soluble coffee, and potential global ranking growth if +12% per capita consumption growth is sustained. Still, cultural barriers, such as the competition with tea tradition, add complexity to comparisons.

China Brews Change: Coffee Import Surge

With the recent release of export data from Brazil, China is emerging as a significant importer of Brazilian coffee, maintaining its 6th position in January, consistent with its ranking at the end of 2023. This report delves into the essential aspects of China's coffee market, shedding light on anticipated long-term shifts based on the country's past trends over the last 5 years.

At present, China constitutes 4% of Brazil's coffee exports, in contrast to the U.S. at 15% and Japan at 6%. The surge in China's coffee imports began in the latter half of 2023, initially driven by a diversion of imports from Ethiopia due to differentials, as discussed in previous reports. Still, the country is almost evenly matched with Japan, one of the main traditional coffee destinations, and is yet to be considered as a main destination itself – why is that?

First, it is crucial to consider China's production trend. Until approximately the 12/13 cycle, the country maintained a relatively balanced output and consumption, even though its coffee imports were smaller. China initially became a net importer in the 10/11 cycle. Second, and perhaps most importantly, per capita coffee consumption in China is comparatively low. On average, an individual in China consumes 0.21kg of coffee annually. In contrast, the global average is 1.3kg per person per year, marking a six-fold difference between China and the global average.

Figure 1: Brazil Coffee Exports to China (‘000 bags)

Source: USDA

Figure 2: Production and Consumption in China (M bags)

Source: USDA


In recent years, the Chinese supply and demand (S&D) dynamics have strengthened considerably, despite a production growth rate that lags behind the escalating demand. China predominantly produces arabica coffee, amounting to just under 2 million bags. While there is a small portion designated for re-exports, the majority of the supply is domestically consumed.

This internal consumption is evenly split between roast and ground (R&G) and soluble coffee, maintaining a close 50/50 division in recent years. Interestingly, non-traditional coffee destinations typically favor soluble or instant coffees over R&G. For instance, according to USDA data, soluble coffee represents 5% of consumption in the European Union and 3% in the United States.

If China maintains its average growth in per capita consumption (+12% YoY, in contrast to the global average of +0.5%), the country could potentially secure the 5th rank in global coffee consumption. This would place China behind the European Union as a bloc, the United States, Brazil, and Japan (at between 6.5M and 7.5M bags).

However, if China were to reach per capita consumption levels equivalent to the global average, it might only trail the European Union as a bloc in coffee demand, projected to exceed 33 million bags. Still, it is essential to acknowledge a cultural barrier for coffee consumption in China, where the well-established tradition of tea consumption competes. Therefore, any comparison relies on subjective factors beyond the quantitative measures explored in this analysis.

Figure 3: Coffee S&D – China (M bags)

Source: USDA

Figure 4: Per Capita Consumption – China and World (kg/person/year)

Source: USDA

In Summary

The recent export data from Brazil reveals China's emergence as a notable importer of Brazilian coffee, maintaining its 6th position in January. Despite constituting 4% of Brazil's coffee exports, a surge in imports started in late 2023.

China's production trend, shifting to a net importer since the 10/11 cycle, and low per capita consumption of 0.21kg annually, compared to the global average of 1.3kg, also influence the dynamic.

The Chinese supply and demand dynamics strengthen, primarily producing arabica, with internal consumption split between roast & ground and soluble coffee. If China sustains its +12% per capita consumption growth, it may rank 5th globally, but cultural barriers, competing with tea tradition, add complexity to comparisons.

Weekly Report — Coffee

Written by Natália Gandolphi
Reviewed by Pedro Schicchi


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