Coffee into gold: is it Starbucks' Chinese Dream, or is it the Chinese coffee dream?

China has become the second largest market for Starbucks in the world, after the United States, where it originated. Photo: Reuters

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Although Starbucks represents the US coffee shop chain, they are now choosing to open the world's largest flagship store in China. The boutique bakery (Reserve Roastery) in Shanghai, one of Starbucks' top concept stores, covers an area of 30000 square feet. There are only two Starbucks boutique bakeries in the world, and the new Shanghai store is twice as large as the first concept store that opened in Seattle in 2014.

The symbolism behind it may be more remarkable than the actual revenue of this giant flagship store. Starbucks' development direction of Sinicization in recent years is clear, as can be seen from the Chinese decoration of the new store. Perhaps Starbucks, which first entered China, did not expect that today's China will be the second largest market for this multinational chain, after the United States, where it originated. Starbucks now has more than 3000 stores in China, and it was announced earlier that they aim to have 5000 stores in China by 2021.

According to a rough estimate, Starbucks stores in China account for 10 per cent of global chain stores, compared with only 3 per cent of all Starbucks stores in 2009. More interestingly, if you go back 10 years, when Starbucks planned to develop its business in China in 1999, the whole of China did not even have the concept of a coffee shop.

The boutique bakery (Reserve Roastery) in Shanghai has officially opened and is currently Starbucks' largest flagship store in the world. Photo: Reuters

Starbucks is afraid to expand at the rate of adding a branch in less than a day, which is precisely to see the huge development potential of the Greater China market. China is now one of the world's leading consumers of coffee, with the coffee market surging from 1.1 billion yuan in 2006 to 20 billion yuan last year, compared with 128200 metric tons of coffee beans last year, with an average annual growth rate of 22% since 2006. The explosive increase in demand for coffee has something to do with the rapid growth of China's wealthy population and the popularization of the middle class in recent years. It is no longer only the upper class that can afford to drink boutique coffee. Similarly, the link between high-end coffee and middle-class consumers is rapidly taking shape in major Chinese cities. The Starbucks logo, as a classic status symbol, obviously hits the psychology of the rich Chinese, so China has naturally become an excellent place for Starbucks to expand its business. in fact, Starbucks coffee in China is even more expensive than Starbucks in the United States.

Or, Starbucks' way of doing business only means that coffee is popular in China's first-and second-tier cities and is a middle-class taste of life, but the truth is more than that. For people in small rural areas in remote areas, coffee is not only more common, but also indispensable, because it is a huge source of income.

Yunnan has been transformed into the largest coffee producing area in China. Due to its considerable income and greater security, many rural areas have changed from growing sugar cane to growing coffee.

Today, if we only think of Pu'er tea in Yunnan, it will not be able to keep up with the general trend of China. Growing tea is far less profitable than growing coffee. Yunnan has long been transformed into China's largest coffee producing area, accounting for 98% of domestic coffee production. In Starbucks' newly completed Shanghai flagship store, it even exclusively sells high-quality coffee beans produced in Yunnan. According to China Daily, a farmer who owns a 3-hectare coffee field in Yunnan earned 100000 yuan last year just by selling coffee beans. This is an astronomical figure that they hardly dared to imagine in the past. However, all the changes will take only 10 years.

Ten years ago, with the subsidy of the Yunnan local government, a group of rural people changed from growing sugar cane to growing coffee. Based on the fact that coffee is not a staple food, they had a low degree of social awareness in rural areas. At first, they were hesitant and reluctant. Only some of them dared to try. As a result, coffee quickly became popular in big cities, and coffee beans successfully allowed one impoverished countryside after another to grow amazing wealth.

At the same time, in order to maintain the quality of coffee and make farmers willing to grow it, coffee companies not only deliver beans and technology, but also have a price guarantee mechanism to ensure that farmers will not lose money, not to mention the fear that falling prices of coffee beans will affect their income. From the farmer's point of view, growing coffee is not only a steady gain, but also a good job. Because growing coffee is much easier than growing sugar cane in the past, it doesn't take much effort. During the harvest period, even the elderly and children in the family will go to the fields to help with the harvest. Ten years later, more than half of the farmers in the area choose to grow coffee, and the coffee field covers an area of 55 hectares.

According to a survey conducted by the Ministry of Agriculture in 2016, more than half of the 73000 tons of coffee fields in Yunnan will be shipped to foreign countries, with exports worth 280 million US dollars.

Making a cup of branded coffee represents the middle-class image of the wealthy class in China's first-and second-tier cities, but growing a basket of coffee beans is the golden dream of China's rural society. For villagers who have been farming for generations, growing coffee is a wise decision, which not only improves their lives, but also helps to lift them out of poverty. When they get rich on coffee, they become the next middle class, and then, you know, of course they drink a cup of coffee and savor life. Similar stories happen every day in remote rural areas, perhaps faster than Starbucks stores.