Severe Global Coffee Bean Shortage Turns Overseas Buyers Toward China’s Growing Regions

At a Glance (China Coffee Network): A severe drought in Brazil has slashed global coffee bean output, turning international buyers toward China’s Yunnan region; Volcafe has announced a Yunnan joint venture to source and trade locally grown beans, opening fresh opportunities for the province’s coffee industry.

With Brazil, the world’s largest coffee producer, hit by a sustained drought that has sharply cut bean output, international buyers have turned their eyes to the Chinese market. On Tuesday, US food company Volcafe announced it will set up a joint venture in China to purchase and sell coffee beans grown in Yunnan Province.

Analysts believe that although China’s coffee bean output is less than 1% of the global total, it still represents a new source of supply amid the sharp global drop in production.

Currently, several international firms including Nestlé and Starbucks have already set up coffee bean procurement stations in Yunnan. According to the Brazilian National Coffee Association, this year’s output is expected to reach 2.46 billion kg—nearly 20% below last year—and next year’s could fall below 2.4 billion kg, the steepest decline in 50 years.

Brazil is the world’s largest producer of Arabica beans, the main raw material for coffee shops, whose price has roughly doubled this year. A global business head at commodity trader ED&F Man said China’s mild-flavored Arabica is a relatively new variety in the global coffee market but is rapidly winning recognition among coffee lovers worldwide.

Volcafe estimates Yunnan’s annual bean output usually exceeds 60,000 tonnes. According to the latest from the Yunnan Coffee Industry Association, Yunnan accounts for over 95% of China’s coffee planting area, and this season’s output is expected to reach around 120,000 tonnes.

Among A-share listed companies, Kangen Bio (600572.SH) is involved in coffee, with products including instant coffee and coffee bean powder sourced from Yunnan. Moreover, Yunnan Kangen Bio Coffee Co., Ltd., established by its controlling shareholder, focuses on coffee research, cultivation and processing, and plans several ten-thousand-mu ecological coffee demonstration bases in Pu’er, with the first 10,000-mu demonstration garden already underway.

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