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Jamaica seeking new partners for coffee marketing in China

02 February 2013

In December 2012, it was announced in the Jamaican press that the Jamaican Ministry of Agriculture would be terminating its exclusive marketing contract with Zhejiang Dunn’s River Coffee Company. From 1 February 2013, a range of Chinese companies will be eligible to apply for licences for the marketing of Jamaican coffee in China. It is expected that Jamaica’s Coffee Industry Board (CIB) will approve ‘only a limited number of dealers’.

The article notes that while efforts have been made to promote coffee sales in China since 2009, the CIB has faced challenges related to trademark protection, and in 2011 sent a coffee specialist to China ‘to maintain and preserve the quality of Jamaican coffee and protect its Jamaica Blue Mountain and Jamaica High Mountain Supreme trademarks’.

China is nevertheless seen as offering great market potential.  According to the Chinese coffee shop chain SPR Coffee, currently ‘the 1.3 billion residents of China consume only 200-400,000 bags of coffee annually’, comparing this to 1 million bags consumed by the 5 million residents of Finland.  However, the company notes that ‘coffee consumption in China is currently growing at a rate of 30% annually,’ compared to global growth of 2%. While SPR Coffee notes that China ‘has the potential to become a major coffee-consuming country’,  the Jamaican CIB Director General realistically assesses that currently ‘the market in China for luxury coffee is still very small’. 

Editorial comment

The importance of ensuring price premiums for quality-differentiated coffee is highlighted by the general difficulties facing the Jamaican coffee sector in 2012, with both export volumes and sales down (see Agritrade article ‘ Jamaican coffee sector falls short of expectations’, 28 October 2012).

While the challenges faced in exporting to China in part reflect the cultural complexity and dynamic nature of evolving Chinese markets, they also reflect the difficulties faced in sustaining quality-based product differentiation in a market where regulatory enforcement of standards and respect for quality labels is underdeveloped. This is likely to be a challenge not only for quality-differentiated Jamaican coffee exporters but also for other ACP producers such as Namibian exporters of quality-differentiated beef products.

The coffee sector, however, faces particular problems, given the meteoric rise of coffee shops and cafes that serve a growing range of coffee and tea blends to cater for a wide range of consumer groups. While creating vast new market opportunities, this development can complicate efforts to ensure the maintenance of premium-priced market components. This will require careful strategy regarding how to sustain premium-brand identities and associated premium prices, given the rise of these new mass market outlets.

The challenges faced in developing exports to China also reflect the difficulties faced by ACP food and agricultural exporters in diversifying beyond traditional markets. For many years, despite the duty-free access to a continuously expanding EU market, ACP exporters have tended to trade via traditional routes. Given the relatively small size of ACP companies, mobilising the necessary human resources to search out and develop new markets is often a challenge. However this challenge can be met by developing a clear strategic vision of the way forward on the marketing side and taking advantage of new information technologies.

These notable exceptions offer a potential for knowledge-sharing across ACP countries of the prerequisites for effective market diversification. There would also appear to be scope for sharing knowledge on the increasingly important issue of finding your way around the huge Chinese market, both for quality-differentiated and undifferentiated products.

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