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Go froth and multiply

Updated: 2013-05-03 10:13
By Li Aoxue ( China Daily)

Go froth and multiply

David Kiwanuka sees the need to grasp coffee drinkers in China. Provided to China Daily

Lattes and cappuccinos may be the rage but Uganda is a robust little grower in the coffee market

Word of mouth holds Uganda's best hopes of turning the increasingly sophisticated Chinese palate toward buying more of its predominantly robusta coffee.

China's fast-growing crowd of coffee drinkers may consume more arabica coffee from Kenya or Ethiopia at present, but that comes already processed and packaged via Western brands.

Ironically, it is Uganda that leads the way among African producers in exporting coffee (arabica and robusta) direct to China and to the world. It may only be 250 tons a year to China, a fraction of total Chinese imports, but it is expected to grow exponentially as the market expands - especially if it gets more people talking.

That's what's been happening with the Chinese, mainly southerners, returning home from Uganda, according to David Kiwanuka, marketing director of Uganda Crane Coffee, a joint venture between Uganda Coffee Development Authority and Beijing North Star Industrial Group.

"There has been an increase in orders from coffee-roasting factories in eastern and southern parts of China for our green coffee beans, which they then roast and sell to coffee houses and supermarkets around the nation," Kiwanuka says.

Go froth and multiply

"The businessmen in southern China tend to be open-minded and are more informed (compared with those in the north), and since there are lots of overseas Chinese originally from the south, they become the main power in promoting the consumption of coffee in China."

Coffee consumption in the Chinese mainland totaled 40,000 tons last year, although this figure is growing at 10 to 15 percent a year, much faster than in the now saturated European and North American markets.

It has been predicted by a Ugandan official that it will take China 10 to 15 years to develop into a mature coffee market, compared to Japan's 40 years, Xinhua News Agency reported.

Despite how much it sells, Kiwanuka says Ugandan coffee could only ever be fourth choice after that of Yunnan province in southwest China, Southeast Asia and South America.

Kiwanuka says UCC sells green beans for about 35 yuan ($5.68) a kilo, but that can't compete with Yunnan raw coffee, which goes for as low as 25 yuan a kilo. Chinese coffee manufacturers are also more familiar with produce from Southeast Asia, particularly Vietnam and Indonesia, he adds.

"And China is traditionally a tea-drinking country," Kiwanuka reflects. "Most people think coffee is expensive to drink."

A less obvious deterrent, he says, is the need for coffee-making equipment to roast, grind or brew the raw beans.

"Most consumers do not know about using professional equipment to make coffee, and think instant coffee is more convenient to make," Kiwanuka says.

UCC used to promote its coffee to large hotels in China, where there was a big demand, but because they also had to have processing equipment, there were few orders and the Ugandan company was forced to give up.

"It would have cost us about 500,000 yuan ($81,000) to 1 million yuan to provide professional coffee-making equipment for a five-star hotel, and that would be as much as our revenue for a whole year," Kiwanuka says.

So to promote its business in China now, UCC goes online and appears at exhibitions.

"We went to Taobao to sell Uganda Crane Coffee as we know most white-collar people and Chinese returning from overseas have a habit of shopping online."

Kiwanuka says UCC frequently gets orders from Shenzhen clients, and then through word of mouth, more orders arrive from their friends.

"Usually in food and drink sales, word of mouth is very important, as once people have tried and liked the taste of your product, they will recommend it to others, plus the price of our product is not that expensive, as it costs about 70 to 80 yuan per bag, which is average for the market."

Uganda Crane Coffee has also been to several exhibitions such as Canton fair. In 2010 when the World Expo was held in Shanghai, UCC's revenue reached 4 million yuan within 6 months, doubling its annual revenue.

Kiwanuka believes as China is now holding more international events and becoming internationalized, drinking coffee will become a trend among Chinese people.

"And what we need to do is just grasp the increasing number of these coffee drinkers," he says.

Wen Jianlian, who trades in coffee in Chengdu, Sichuan province, says compared with Ethiopia and Kenya, Uganda coffee "came to the Chinese market quite late, and so not too many people know of it".

"Also most coffee importers like us would pay attention to whether the exporter would be a stable one in providing the product," Wen adds.

Uganda is the second-largest producer of coffee beans in Africa, accounting for 70 percent of the continent's exports each year, and with a history of growing coffee for more than 100 years.

Uganda produces almost four times as much robusta beans as arabica ones. The country is believed to be the original source of the robusta species.

Contact the writer at liaoxue@chinadaily.com.cn

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