Juan Valdez Eyes China as Colombia Steers Asians From Tea

Juan Valdez Eyes China
A coffee picker displays ripe, bright red arabica beans used in specialty coffees in the Andes mountains in the Antioquia province near Ciudad Bolivar, Colombia. Photographer: Alejandra Parra/Bloomberg

Colombia, known for coffee farmer Juan Valdez and his donkey sidekick Conchita, is looking to steer new generations of Chinese consumers to pick up a latte instead of tea.

Colombia’s National Coffee Growers Federation is hosting experts from China for tastings this week and created a logo to promote the brand in the Asian nation, the group’s Chief Executive Officer Luis Munoz said. The logo includes a phonetic spelling of the fictional farmer’s first name, followed by Chinese characters for “imperial,” “aroma” and “savor” as Colombia targets an “exponentially growing” market, he said.

“The culture is thousands of years old,” Munoz said in a May 26 interview at the group’s headquarters in Bogota. “It’s clear the market has new generations” open to drinking coffee and not just tea, he said.

Colombia, the world’s second-largest grower of arabica coffee, as well as Nestle Corp. and Starbucks Corp., are eyeing new customers in China as an expanding economy spurs consumer spending and retail sales. Seattle-based Starbucks, the world’s largest coffee-shop operator, plans to more than triple its outlets on mainland China to 1,500 by 2015 as average profitability at stores there outpaces the U.S.

Purchases by younger Chinese are fueling demand for arabica coffee by 10 percent to 15 percent a year, according to an industry group known as China Coffee Association Beijing. Mild arabica beans are favored by brewers of specialty drinks such as Starbucks.

Supply and Demand

While consumption of commodities in China has led to higher prices for oil, coal and copper, the market for Colombian coffee in the Asian nation is “very small” and won’t tip the balance between supply and demand, Munoz said.

China’s imports of coffee will rise to 450,000 bags in the 2010 crop year from 425,000 a year earlier, according to U.S. Agriculture Department figures. Each bag weighs 60 kilograms, or 132 pounds.

Colombia is making inroads in Asia as it seeks to more than double its output this decade after the price of coffee touched a 14-year high in May. China, Japan, Korea and Australia bought about 17 percent of Colombia’s crop last year of 8.9 million bags of arabica coffee, according to Munoz.

“We are bringing Colombian coffee to markets that once were far away,” he said. “Asia will grow enormously.”

China ranks first among 22 emerging Asian economies as the nation most likely to maintain fast growth over the next five years, according to the Bloomberg Economic Momentum Index for Developing Asia.

14-Year High

Arabica coffee jumped to $3.089 on May 3, the highest since May 1997, in part as storms cut Colombia’s April harvest. Coffee has gained 94 percent in a year. Arabica for July delivery rose 0.90 cent, or 0.3 percent, to $2.6460 a pound at 2 p.m. on ICE Futures U.S. in New York.

The federation, which represents the majority of Colombia’s more than 550,000 coffee growers, forecasts 2011 production of 9.5 million bags, and output may jump to 18 million bags in 2020, according to Munoz. In 2009, the crop fell to a 33-year low of 7.8 million bags as adverse weather damaged plants.

Next year, growers will harvest as much as 11 million bags, according to the federation.

From October 2011 through September 2012, Colombian production will rise to 10.5 million bags from 9.5 million bags in the year-earlier period, partly as growers combat disease, the U.S. Department of Agriculture said in a report this month.

Brazil is the largest producer of arabica coffee.

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