Investment Idea: More Coffee in China
Green Chip International
By Sam Hopkins
Here's a secret only we westerners who have been to China can tell you: Chinese people are incredibly corny. Though headlines may tell stories of poisoned toys and political prisoners, the average Zhou looooves Simon and Garfunkel. One hotel I stayed at for over a week played "The Sound of Silence" on continuous loop in the lobby.
Forget Chinese water torture-hearing "Auld Lang Syne" and "Santa Claus is Coming to Town" in bars and emanating from garbage trucks in the middle of summer made me want to confess to crimes I had never committed.
"Just make the sugary songs stop!" I thought to myself.
But tunes aren't the only saccharine stuff the Chinese consume happily. Coffee, having made the trip from its original home in Africa over to Europe, the Americas, and now to Asia, is threatening to supplant tea as the Chinese beverage of choice. In Chinatowns in New York and San Francisco, though, as in many bakeries in China, you're likely to pucker from all the sugar in your cup of Zhou (I just had to use the pun again, sorry).
One of my most trusted contacts in China sent me this telling photo in April, from his adopted hometown of Xi'an, in the country's central region. One of the "Four Great Ancient Capitals" of the Middle Kingdom, Xi'an is home to the famous terracotta army of the Emperor of Qin and was capital of thirteen dynasties.
Now, in one square mile, there are three Starbucks locations.
There's also a Starbucks on Tiananmen Square, just past the Forbidden City. Overall, that behemoth has 246 outlets in China, slurping up Chinese competitors and zipping along towards a goal of making China its biggest non-US market.
Green Chip Stocks' play, Coffee Pacifica (CFPC.OB), is right in the thick of things, making China the target of its own major marketing push as it sources coffee beans from Papua New Guinea, a hop, skip and jump south from China, just north of Australia.
This May, Chinese coffee farmer Du Yansheng told Reuters News Agency that when he began a coffee business in 1998, "monthly sales were about 10 kilos. Now our sales are calculated in tons." Chinese exports are on the rise, shipping to places like Germany and Japan.
But just as sure as Chinese love random bits of foreign glitz and brand-name merchandise, a new generation of Chinese consumers is getting a taste for coffee from the best producing regions in the world, like Papua New Guinea.
The same Reuters story confirmed what my tongue found during my month-long stay in China in 2005, reporting the presence of a "soluble coffee packed with sugar and powdered milk - known as Three-in-One - is finding its way into rural areas as well as cities.
Yuck.
I insist on being the only person to add anything but bean juice to my cup of coffee, and I predict that more and more Chinese will acquire a sophisticated palate with coffee consumption just as they have broadened into top-shelf liquor, wine, and luxury clothing in recent years.
As China's coffee culture turns the corner from 3-in-1 to actual flavor, Coffee Pacifica has put itself in a position to savor every new customer in China's booming cafés.
Regards,
Sam Hopkins
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posted by Victor Lloyd Smith @ 3:13 PM
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