Talking about coffee in Yunnan with Mark from Manlao River
Updated: May 10, 2019
“This coffee falls into your stomach, and straightway there is a general commotion. Ideas begin to move like the battalions of the Grand Army on the battlefield, and the battle takes place. Things remembered arrive at full gallop, ensign to the wind. The light cavalry of comparisons deliver a magnificent deploying charge, the artillery of logic hurry up with their train and ammunition, the shafts of wit start up like sharpshooters. Similes arise, the paper is covered with ink; for the struggle commences and is concluded with torrents of black water, just as a battle with powder.”
- Honoré de Balzac, Treatise on Modern Stimulants
The darkish-brown and bitter liquid we have every so often been served at buffet breakfasts while traveling in China can hardly qualify as coffee. It bears more resemblance to what comes out of a coffee machine after it has been rinsed rather than to the catalyst of all the processes Balzac so vehemently described.
But increasingly the coffee culture is making progress in this country, with independent and chain coffee shops sprouting in big and smaller cities, consumers demanding better products, and producers and roasters working hard on the development of higher standards and quality products for the local market and also for export. At the center of this revolution lies Yúnnán (云南), the province responsible for 98% of the country’s coffee production.
Mark Respinger from Manlao River Coffee, a Yunnan-based specialty coffee roaster is Australian with a major in Finance. Little did predict his affection to coffee. Having worked for several years as a consultant in highway safety in his home country, Mark moved to China in the early 2000s, where the expressway network was rapidly developing as a result of the country’s economic growth. His later transition to the international commodity trade sector eventually led him to the world of coffee, with which he has been fully engaged for the last three years.
When asked about his job he says that “there is no real job description”. On the one hand, it is about identifying trends on the customer market and their expectations in order to orientate the product line. On the other hand, it is to make sure that products meet the standards of production and quality. This allows him to step beyond the PR side of the business and get a glimpse - up to a certain point - in each step of the chain of coffee production, processing and marketing.
Coffee in China – its origins and the actors involved
For many, finding out that China is a coffee producer may be surprising news. From its early origins in the mounts of Ethiopia, coffee made its way across the Arabic Peninsula and the Ottoman Empire to Java, Europe and to the New World. It arrived in China only a few hundred years later. The first saplings of Arabica coffee were brought to Yunnan at the end of the nineteenth century from neighboring Vietnam and Burma. Albeit in smaller quantities, coffee of the Robusta variety can also be found in Fújiàn (福建) and Hǎinán (海南), where it was brought in 1908 by Chinese people from Malaya.
Production in Yunnan was conducted at a small scale until the end of the 80s when it was propelled by a project to improve the livelihood of farmers in far-flung rural areas of Yunnan, carried out by the Chinese Government, Nestlé (which arrived to China in 1988), the United Nations Development Program (UNDP) and the World Bank. In 1992, the Yunnan Coffee Processing Plant Company - at present still the largest coffee roasting and processing company in China - was established; and, by 1994 the first commercial plots took off. In that period, Guǎngdōng (广东), Guǎngxī (广西) and Hainan also developed a coffee industry.
Investments and international demand rather than domestic consumption remained at first the driving force for further development, with Nestlé and Starbucks (which arrived to China in 2012) opening coffee centers in Yunnan in order to source their own beans. Both companies introduced better coffee-growing practices and relatively strict production and supply standards, cooperated with local villagers, and provided agricultural assistance services and training for farmers. They also introduced alternative bean varieties to the area.
Arabica is less genetically diverse than Robusta and as a result much more sensitive and susceptible to leaf rust. Nowadays, around 90% of the coffee in the region is of the Catimor variety (a natural hybrid containing Arabica and disease-resistant Robusta), with the other 10% being the ‘traditional cultivars’ of Bourbon and Typica, which have shown a large capability of adaptation in various climatic zones.
In the late 2000s China emerged as a coffee producer and coffee began being grown on a large scale as a commodity. The coffee value chain is made up of four main phases: Cultivation, Processing, Roasting/Packaging, and Consumption. The first two take place in the country of production. Once collected coffee berries are transported to processing mills where the pulp is separated from the bean. The result is raw coffee in the form of green (dried) beans ready to be sold to exporters/importers or to domestic buyers for roasting and packaging. The roasters (specialized companies or individual coffee houses), also called manufacturers, usually create blends (combinations of different types of beans and of beans of different origin) with an exact flavor and aroma. Finally, the coffee is ground - or not, retail packaged, branded, and sold to retailers (via a logistics company), who will make sure it arrives at the hands of the final consumer.
China mainly exports green beans for major buyers in North America and Europe, where it has found a niche as a low-cost source of commercial grade Arabica coffee. It then imports higher priced roasted coffees, mainly from the USA and Italy (to satisfy the country’s upper class demands); higher priced soluble coffees from regional trading partners in Indonesia, Malaysia and Korea; and, low grade green beans of the Robusta variety from Vietnam and Indonesia.
Nonetheless, China’s emerging position as an important coffee producer, exporter, importer - and as a consumer - has begun to reshape global, and particularly regional coffee value chains. By 2016, China already became the 13th largest coffee producer in the world and by 2017 the leading international coffee groups and commodity traders had set up operations in Yunnan in order to source their green coffee and supply it to smaller independent roasters.
Chinese firms - although still not global in scope – have been trying to position themselves vis-à-vis these dominating international traders and roaster lead firms. On the one hand, large Chinese trading firms are beginning to trade important volumes of raw coffee globally. On the other hand, Chinese coffee brands are surging as roaster lead firms at various scales. Rising domestic production in Yunnan has also allowed the proliferation of Chinese integrated firms. The Chinese Government has been actively supporting the strategic incursion of Chinese firms in the coffee value chain, as it sees them as agents in agricultural modernization and as a vehicle to implement geopolitical goals through regional economic integration. It has also been supporting large state-owned-enterprises (as COFCO, which has ambitions to establish itself as a leading Chinese coffee manufacturer) and promoting New-type Agricultural Operators (NAOs) - farmers’ cooperatives, specialized large farms, family farms and dragon-head enterprises (DHE)- to further modernize the rural economy.
The evolution of the coffee industry
The history of coffee in Yunnan cannot be separated from the changes in the agricultural policies and practices taking place in China during the second half of the twentieth century. In 1978, after many years of a collectivized economy, rural households acquired land use rights (of small and often scattered pieces of contracted farm land) and farmers got more leeway to decide what crops to plant and were allowed to sell surplus production.
By the end of the mid-1980s, however, the central government's focus and investment turned towards urban development, and much of the agricultural growth stagnated. These scattered, weak and small plots, made large-scale production and mechanization difficult. Farmers weren’t able to afford the costs associated with modern farming equipment, or with acquiring new skills or obtaining accurate and timely market information. Battling to find solutions, in the mid-1990s, the Chinese Government proposed "agricultural modernization", which involved land consolidation to allow large-scale operation and vertical integration of the value chain.
Government-owned model farms were the first that started cultivating coffee and distributing coffee seedlings to neighboring farmers. With the economic liberalization and the arrival of international buyers many farmers started switching to coffee from other crops and coffee production started developing in Yunnan. By the early 2000s, farms were being privatized and farming kept expanding. Small farmers have been the most significant producers of coffee in Yunnan, but large farms and agribusinesses have proliferated. Large domestic integrated companies (like Hogood and Linfeng) began to catch up and compete directly with the dominant international firms and to offer a reliable supply of coffee.
An important step came in 2012, when local authorities in Pu’er (普洱) and Xīshuāngbǎnnà (西双版纳) Prefectures - the main coffee producing zones in the province, although coffee is also grown in Bǎoshān (保山), Déhóng (德宏) and Líncāng (临沧) - began promoting large-scale production of “ecologically-friendly coffee” by distributing free shade tree seedlings (indigenous and exotic) to coffee farmers. As a result, it brought a large-scale transition from mono-culture to shaded coffee.
While full-sun coffee management strategies and large fertilizer inputs to produce high yields cause soil degradation and long-term decline in yields, shade-grown coffee has lower inter-annual variation in yields. Besides shade tree products (e.g. fruits, timber, macadamia) can supplement coffee income, alleviating the impact of coffee price volatility. It also ensures a higher biodiversity of the zone, improving nutrient cycling, and reducing the impact of climatic hazards. Nonetheless, the benefits for yield and quality decrease when growing conditions improve, due to shade trees competing with coffee trees for light, water and nutrients.
In 2009, Manlao River became the first coffee producer in Yunnan to become organically certified in China. “Creating an organic coffee takes a long time”, says Mark. The producer needs to produce the same type of organic coffee for four years to the same standards. The first three years the coffee cannot be branded as organic. Only after four years of consistent production will the company be awarded the organic label and can market its coffee as such.
Coffee production kept growing steadily, hand in hand with the appearance of a more demanding clientele of coffee drinkers and coffee shops. The new generation of coffee producers and suppliers didn’t ignore this trend.
In 2012, the official roaster brand of Manlao River Coffee was established (while it stepped away from the production business) aimed at developing new origin and blended roasts. “Manlao River realized that specialty coffee was the next step”, says Mark. To this end, Manlao River collaborates with Yunnan Agricultural University and invests in research in order to make sure coffee producers implement better practices and control standards at the farm level, but also during the processing stages as to get the best quality and consistency and develop new products. “The company pledges to buy a percent of the production”, says Mark, so farmers have a guaranteed buyer for the cherries that meet the standards, “but we also try to find new buyers for their produce, since it is rather difficult for the buyers to approach the farmers directly”.
Under this model agribusiness firms play an intermediary role helping commercial farmers achieve lower transaction costs and sell at the current global market price. “Some computer-savvy farmers even check the international price on the Internet and thus decide when it is better to sell”, Mark adds. Entrepreneurs and companies also provide the needed access to skill, capital and market. Farmers can also establish contractual relationships with the company and commit to sell only to the company, but this is rather rare.
Drinking coffee in the land of tea
Lovelier than a thousand kisses,
smoother than muscatel wine.
Coffee, I must have coffee,
and if anyone wants to give me a treat,
ah!, just give me some coffee!
- Johann Sebastian Bach, Coffee Cantata
There is a Chinese saying ‘if you hate someone—just persuade him or her to open a coffee shop’. It requires Lots of investment and small income, with clients sitting for hours in front of one cup of coffee.
“It is a tough business”, Mark says. In China, there are lots of coffee shops appearing everyday but a lot of them disappear as quickly. Many of the people involved in the business do not have the necessary preparation or knowledge when it comes to selecting the right beans, brewing coffee and maintaining consistency.
Coffee was not an instant hit when it first made its entrance to China; tea was the traditional drink. At first coffee was mainly directed for the consumption of local missionaries and sometimes for villagers on special occasions as weddings. The rest of the country remained basically incognizant of the coffee. In the decades of 1920s and 30s coffee was being served in the many cafes that appeared in Shànghǎi (上海) – “Paris of the East”, a cosmopolitan city were international trends had taken hold. Its presence was not long-lived as coffee houses were all shut down after 1949.
Coffee was only to reappear decades later and, once again, transnational companies were at the forefront of the expansion of the coffee culture. At the end of the 80s, Nestlé targeted the Chinese consumer with their instant coffee, marketed as the ideal gift for friends and relatives on special occasions (who would drink it at home), while other multinationals as Sara Lee targeted hotel chains. Starbucks set a new milestone when the company opened its first coffee store in Beijing in 1999.
Before the 1990s going to a coffee house was seen as an expensive treat. As the Chinese economy started growing with double digits, coffee became more accessible to a part of the society, especially - but not exclusively - young city dwellers. More cafes opened in University districts and residential areas; and culture-themed coffee shops - generally associated with literature, films, and music - were established in tourist and entertainment sites.
But these places were not to become venues where politics was discussed, formulas were being calculated or great art works were being conceived. In a culture where housing is tight and numerous relatives live together, coffee shops offered the perfect “third space” (not home and not work), and promoted a more contemporary culture of coffee drinking and western lifestyle, so attractive to the middle-class youth. While parents and grandparents sat at their little tables in their little living rooms drinking their 3-in-1 sachets, millennials were hanging out at a Starbucks.
Coffee drinking in China is growing at about 15 per cent a year, compared with about 2 per cent for the world. Yet, per capita, it only translates into 5 or 6 cups a year. This average rises to 20 cups in Beijing and Shanghai, still very low in comparison to the US and Europe. There is no doubt, however, that China is a massive market with great potential. Coffee drinking has become more and more attractive, especially in first-tier cities, even if it continues to be seen as a luxury product (high price equals a sign of quality in China) that remains out of reach of most average workers.
There are many choices for today’s coffee consumers in China who can get beans in supermarkets, online or specialized shops to brew it at home or drink a cup brewed at convenience stores, coffee chain shops or third wave independent boutique cafes; or even having it delivered to the doorstep by a kuàidì (快递) express courier. According to people in the specialty coffee industry, third wave is a movement that views coffee as an artisanal or craft product rather than a commodity and believes quality and traceability of the bean is important.
Contrary to the puzzling quagmire of Italian lattes, macchiatos, al vetro, cappuccinos, espressos, marocchinos, lungos, ristrettos, shakeratos, correttos, Chinese consumers prefer instant coffee – a common trend in emerging coffee-drinking cultures. Customers tend to drink their coffee with powdered cream and lots of sugar, to mellow the unpleasant bitter taste. When it comes to brewed coffees Chinese probably prefer American style coffee, which is less strong. Drinking preferences will certainly undergo changes as consumers’ knowledge becomes richer. Cafes have started demanding higher quality and specialty coffee from overseas and domestic suppliers to be able to cater to it. A large portion of China’s high-end specialty coffee is already being consumed domestically, roasted by companies such as Manlao River.
According to the Specialty Coffee Association (SCA), an industry organization, specialty coffee is Arabica coffee with a cup score of 80+ points (coffee beans can be graded out of 100). This is a stricter labeling than the more generic gourmet one, which can refer to high-quality coffee, or it could just be marketing. Only a few years ago, Yunnanese Specialty Coffee was used for blends, including most Arabica blends in Europe, but now China single origin coffees are served in USA and the UK. A single origin has a unique and desirable profile, good enough to be experienced by itself without the need to blend it with other coffees. Recognition of Yunnan coffee increased greatly with the Specialty Coffee Association’s decision to use China as the 2018 Portrait Country. This involved a series of promotions aimed at introducing coffee professionals around the world to the rising quality of Yunnan coffee.
But the sea change in coffee drinking habits will take its time. Mark explains that besides their single origins, regular blends (also using Yunnan coffees) and one-time micro-roasts with rare beans, Manlao River has also developed a series of “transition coffees” for those drinkers that are taking their first steps towards coffee drinking. These include flower coffees, which have a distinctive tea profile, with flower aromas, both of which make coffee more palatable for people used to drinking tea. As customers slowly get used to coffee drinking with a milder bitterness, they can transition to more intense flavored types. Important is to “introduce Yunnan coffee to coffee consumers in China and around the world”, he adds.
As I try to identify the characteristic notes in the samples I got from Manlao River – rather unsuccessfully, I am afraid – I am more and more aware that my stars don’t read coffee. According to experts, customers as me frequently ‘lack the language to adequately communicate’ what it is that we like or dislike when it comes to different types of coffee or what it is that we are experiencing. But for those who do know their coffee and are passionate about it, Yunnan for sure offers a lot to discover.
Sources and further reading for the post on coffee in Yunnan