Who is the king of Yunnan International Coffee Trading Center YCE or Chongqing Coffee Futures Trading Center?

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Editor's note: some institutions predict that the size of China's coffee market will exceed one trillion yuan in 2025. Since 2018, with the capital concern, the rise of Internet coffee and the accelerated layout of giants, has China's coffee market entered a period of explosion?

The heroes competed with each other, and there was smoke everywhere. Who is the next king?

When the ID:pintu360 reporter was writing this article, Shu Yang, general manager of Yunnan International Coffee Trading Center (hereinafter referred to as YCE), entrusted by the Ministry of Commerce, had flown to Mexico, representing China as an observer state for the first time to attend the 121st annual meeting and council of the World Coffee Organization (ICO) held on April 9-13.

After that, Shu Yang will also fly to Seattle, USA. He proudly told the reporter that China is the theme portrait country of the 30th Fine Coffee Expo in the world, which means that Yunnan Coffee has been unveiled at the world's largest boutique coffee exhibition for the first time.

Planting has a long history but lacks brand influence.

Yunnan is the largest coffee growing area in China. Since coffee was introduced to Yunnan by a French missionary in 1892, it has been planted for more than 150 years. However, Yunnan coffee really formed the development of industrialization, only in the last 30 years.

Relevant data show that the western and southern parts of Yunnan Province are located between latitude 15 °N and the Tropic of Cancer, and most areas are at an altitude of 1000 murmur2000 meters above sea level. Fertile soil, sufficient sunshine, rich rainfall and large temperature difference between day and night are good natural conditions for growing coffee.

Statistics from the Yunnan Provincial Department of Agriculture show that by the end of 2017, there were eight major coffee producing areas in Yunnan, including Pu'er, Xishuangbanna, Wenshan, Baoshan, Dehong and Lincang, with a total planting area of 1.8 million mu and a total output of 136000 tons in 2017. accounting for more than 99% of the country's total coffee output. Among the eight major producing areas, Pu'er is the main producing area of Yunnan coffee, with a planting area of 770000 mu and an output of 56000 tons in 2017, nearly half of Yunnan's total coffee output.

In the past five years, the planting area of coffee in Yunnan has increased rapidly, and the variety is mainly Katim, a hybrid of Arabica and Robusta, and its quality is also improving. In terms of processing methods, it is also based on local natural conditions, most coffee producing areas are mainly water washing processing, and there are many new generation of curry farmers and enterprises to explore the new flavor of coffee by means of sun exposure and honey treatment.

However, despite its unique natural conditions and long planting history, the development of Yunnan coffee industry for more than 30 years is still relatively backward: over-reliance on primary raw materials, accounting for only 1.5% of the world's total coffee production, and more importantly, the local lack of well-known brands, lack of awareness and influence in the global coffee market.

In the early stage of the development of Yunnan coffee industry, it benefited from the attention of coffee giants such as Nestle and Starbucks. In 1988, in the market competition with Maxwell, Nestl é decided to purchase raw materials from Yunnan and increase coffee production by crossing new varieties. Since then, Starbucks has introduced new coffee varieties and technologies to Yunnan.

However, the layout of international coffee giants promotes the development of Yunnan coffee industry, at the same time, the business model also has many disadvantages:

First of all, Yunnan coffee lacks brand awareness. 80% of the coffee beans produced each year are exported to Southeast Asia, Europe and the United States as raw materials. Manufacturers such as Nestl é and Starbucks only buy Yunnan coffee as a primary raw material, and no well-known brand really goes out.

Secondly, the variety is too single. According to the natural conditions of Yunnan, each coffee producing area should have a richer variety of coffee, but Nestl é needs cheap raw materials and does not develop boutique coffee in Yunnan. This also directly leads to more than 95% of Yunnan coffee being Katim series varieties.

Third, the lack of pricing discourse. At the same time, Yunnan coffee industry is a labor-intensive agriculture, the annual agricultural output value is about 2 billion yuan, due to Starbucks, Nestle purchase price monopoly, and the purchase price is lower than the international futures price, once the commodity price falls, Yunnan coffee farmers and small-scale coffee enterprises will be greatly affected, which is not conducive to the overall development of Yunnan coffee in the long run.

Provide value services for the whole industry chain

In addition to the flower industry, coffee is the most promising and international industry of characteristic agriculture in Yunnan plateau. Under the background of China's "Belt and Road Initiative" strategy, Yunnan can extend to Southeast Asia and South Asia while relying on the domestic market, and has the basic conditions to become the core place for coffee planting and trading in Asia. Therefore, the Yunnan government attaches great importance to the coffee industry.

As a key development project of the Yunnan provincial government, Yunnan Coffee Trading Center was launched in Pu'er City on July 9, 2014 and was officially established in October of that year. Yunnan Coffee Trading Center was renamed Yunnan International Coffee Trading Center (YCE) on December 29th, 2016.

Yunnan International Coffee Trading Center (YCE) is a state-controlled enterprise in nature and is positioned as a business-oriented public service platform for the whole industry chain of local coffee. At present, there are more than 50 staff members. The business model does not seek price differences by suppressing prices, but by helping farmers and enterprises to increase sales and prices to get commissions and service fees.

As a third-party platform for the coffee industry, Yunnan International Coffee Trading Center (YCE) not only serves its members, but also draws lessons from the models of Colombia, Brazil and other international mature producing areas to actively and effectively organize small and medium-sized farmers to form a group with a certain supply capacity, and to undertake an effective platform for connecting the market and suppliers, with the goal of becoming the most influential coffee trading platform, information platform and pricing center in Asia.

According to reports, Yunnan International Coffee Trading Center (YCE) now has more than 2000 purchaser members and more than 1000 supplier members, including suppliers covering 80% of Yunnan's producing areas and parts of Southeast Asia.

For bulk products, Yunnan International Coffee Trading Center (YCE) uses offline matchmaking and order transactions to provide services for buyers; for boutique coffee, it adopts online auction. Yunnan International Coffee Trading Center (YCE) cooperated with AUCXIS Company of Belgium to develop Yunnan Coffee Trading Center's boutique coffee online trading system and conducted its first internal test on May 13, 2016. In addition, an online trading system for the North American market will be established in Seattle this year.

Shu Yang further added that the Yunnan International Coffee Trading Center (YCE) provides the S to B model, in which the S side refers to the entire supply chain system, and now has the most stringent and perfect quality inspection system in the world. Any raw coffee beans traded from the Yunnan International Coffee Trading Center (YCE) have to undergo strict quality inspection to ensure product consistency and stability.

Warehousing is one of the indispensable links in improving the supply chain. It has been revealed that Yunnan International Coffee Trading Center (YCE) is building and providing standard warehousing services, unifying the standard system and modules of industrial supply chain, providing warehousing, processing, logistics, information and even financial services for both suppliers and demanders, and striving for more market space and bargaining power for Yunnan coffee, thus forming an all-Asian coffee trading center, information center and intensive processing center with Yunnan as the core.

It is worth mentioning that under the guidance of the "Belt and Road Initiative" strategy, Yunnan International Coffee Trading Center (YCE) has extended its cooperation with coffee producing areas of Southeast Asian countries to help local farmers grow coffee and enter the Chinese market through Yunnan International Coffee Trading Center (YCE).

According to the Pintu Business Review, the emergence of Yunnan International Coffee Trading Center (YCE) has changed the integrity of supply and demand, quality assurance and the service mode of the whole supply chain system brought by Yunnan coffee traditional extensive exchange to a certain extent.

Focus on cultivating boutique coffee

With the upsurge of boutique coffee, Yunnan International Coffee Trading Center (YCE) is also exploring and trying for Yunnan boutique coffee. Synthesizing the world-famous producing areas such as Guatemala, Kenya, Colombia and Ethiopia, Shu Yang believes that the natural conditions of Yunnan are suitable and necessary to develop high-quality coffee, so as to improve the overall quality of Yunnan coffee through high-quality coffees. in order to obtain independent pricing, industrial discourse and enhance the comprehensive competitiveness of Yunnan coffee.

In this regard, Yunnan International Coffee Trading Center (YCE) has established Asia's first standard boutique coffee processing park covered by the whole industry chain in Pu'er to attract investment from all over the world to carry out intensive processing of products, thus forming industrial clusters. In the future, Yunnan International Coffee Trading Center (YCE) plans to place the first workshop of coffee industry in Southeast Asian countries. Yunnan will focus on building intensive processing, trading and industrial supply chains, enhance the output value of intensive processing and overall development, and provide Yunnan coffee with a richer variety of products to meet market demand.

It is worth mentioning that after 3 years of unremitting efforts by Yunnan International Coffee Trading Center (YCE), China has finally become the theme portrait country of the 30th Fine Coffee Expo in the world, displaying Yunnan boutique coffee in the world's highest boutique coffee exhibition and trading platform.

Shu Yang said that at present, the proportion of boutique coffee in the world is 20%, and the Yunnan International Coffee Trading Center (YCE) hopes to make Yunnan coffee boutique rate reach 20% in five years. In addition, various coffee producing areas in Yunnan are also testing the diversity of coffee varieties, gradually enriching the varieties. "it is hoped that in the next 5-10 years, the sales volume and export volume of Yunnan coffee in the domestic market will be contrary to that of now, and 70% of the coffee will be sold in China. 80% of the coffee will be sold in China."

Go abroad and let the world know about Yunnan coffee

In Shu Yang's words, Yunnan International Coffee Trading Center (YCE) has been "laying the foundation" since its establishment, actively cooperating with domestic and foreign coffee institutions, building high-quality coffee demonstration farms, holding coffee raw bean competitions and other activities, so that domestic and foreign coffee institutions and consumers know more about Yunnan coffee.

In 2015, Yunnan International Coffee Trading Center (YCE) became CQI's only national strategic partner (ICP) in China, and brought the global quality standard training system for boutique coffee to various producing areas in Yunnan.

Since then, through in-depth cooperation with the Fine Coffee Association (SCA) and the Coffee quality Society (CQI), Yunnan International Coffee Trading Center (YCE) has hired Mr. Tedelinger, former president of SCAA, founder of CQI and world coffee industry leader, as the high-level consultant of Yunnan International Coffee Trading Center to formulate a quality standard system for fine coffee in line with the characteristics of Yunnan coffee industry.

Over the past two years, Yunnan International Coffee Trading Center (YCE) has trained more than 50 international coffee experts and built the most professional coffee training center, cup product center and quality inspection center in Pu'er. According to the latest data, YCE has set up coffee tasting centers in Beijing, Shanghai, Guangzhou, Shenzhen, Taipei and other major cities across the country, as well as offices in the United States, Germany and Malaysia, creating a window for Yunnan coffee to connect with the domestic and international markets.

In 2017, Yunnan International Coffee Trading Center (YCE) and CQI jointly launched the boutique coffee demonstration manor project, and strictly selected 10 manors throughout the province as key demonstration manors, hoping to integrate the standard operation mode of Yunnan boutique coffee and the replicable farm management model through the above forms. In addition, YCE and CQI have successfully co-hosted three Coffee Raw Bean competitions, one of the most recognized competitions around the world, judged by Q Grader (coffee tasters) from more than 10 countries around the world.

At the third Coffee Bean Competition, which ended on March 15, 2018, the number of participating beans, the number of judges, the overall quality and the number of competition activities were the highest in history: there were 123 participating beans, covering all producing areas in Yunnan. The average score of the preliminary competition reached 82.13, and a total of 116 beans scored more than 80 points, indicating the continuous improvement of the overall level of boutique coffee.

Mr. Tedlinger, former chairman of SCAA, founder of CQI and leader of the world coffee industry (third from right)

In January 2018, Yunnan International Coffee Trading Center (YCE) held the first International Fine Coffee Expo in Pu'er, bringing together five major global coffee industry leaders and more than 100 top experts in the coffee industry at home and abroad. It is also this opportunity that Jose Sette, executive chairman of the World Coffee Organization (ICO), formally invited China to become an observer of the World Coffee Organization after attending the event.

Shu Yang said to the Pintu Business Review that observer states need to understand the rules of procedure and working methods of the ICO, and at the same time do a lot of work at home to assist government departments in promoting China's accession to the ICO, and finally formally sign the international coffee convention. "because the ICO is an inter-governmental agency that is of great significance to both coffee producing and consuming countries, we have just taken the first step."

Compared with coffee, Yunnan flower trading market is more mature, Shu Yang said, has also been engaged in the flower industry, in the establishment of YCE before the first contact with coffee. Yunnan Jinyuan Group, the largest shareholder in Yunnan Coffee Trading Center, is also operating the largest flower auction trading center in Asia. From a third-party point of view, Shu Yang and his team can apply more than 20 years of operational experience to the coffee industry. It has also been revealed that based on the Yunnan coffee industry, YCE plans to build a characteristic town in the future, which is already in the early design planning.

It is worth noting that the domestic coffee industry is still chaotic. Through the inquiry and search of the national social organization information record of the Ministry of Civil Affairs, there are as many as 15 coffee associations registered locally. In addition, China has two coffee trading centers in the Shanghai Free Trade Zone and Chongqing. An industry insider who spoke on condition of anonymity commented that behind the scramble to set up coffee exchanges, what is actually competing for the pricing power of raw coffee beans and the interests behind them.

It is understood that at present, in addition to Yunnan International Coffee Trading Center (YCE), the other two trading centers have been licensed. In this regard, another senior person in the coffee industry believes that although Shanghai relies on China's largest coffee consumption market and has the geographical advantage of sales, it has the problem of insufficient management philosophy and investment, and basically has not been put into operation; Chongqing Coffee Futures Trading Center does not have the location advantage of production and sales, in contrast, they attach more importance to the financial attributes of coffee.

An industry veteran, who spoke on condition of anonymity, told Pintu Business Review that there was a lack of professionals in the two trading centers.

Shu Yang said that as a spot trading center for bulk products, the trading work of YCE needs to be examined and approved by the provincial people's government or competent authorities, but due to the special situation in Yunnan, provincial governments and departments have been unable to issue a reply and corresponding confirmation files to Yunnan International Coffee Trading Center (YCE) to carry out spot transactions, which directly leads to a smooth interface with banks in the process of trading. The settlement of transactions is greatly affected.

Pintu Business Review believes that Yunnan coffee industry involves "Belt and Road Initiative" and industrial precision poverty alleviation. Yunnan International Coffee Trading Center (YCE) is actively promoting China's coffee industry to gain an effective voice in the world. However, as to when the "licence" problem can be solved, it is still unknown due to all aspects of factors involved.