US coffee-chain Starbucks is courting the Chinese coffee market by opening its first coffee bean farm and processing facility in China's southwestern Yunnan Province. It is a move aimed at boosting sales in China.
The Seattle-based coffee chain hopes to make China the brand's second home market outside of the US, it's chairman Howard Schultz said as he sealed the deal with Yunnan government officials last week.
Though the Chinese traditionally drink tea, the Starbucks brand has grown exponentially in the country.
Since opening its first store in Beijing in 1999, Starbucks now has more than 800 stores in the greater-China region and it hopes this new deal will help the company expand, said chairman Howard Schultz.
"We're in 31 cities, and in cities that most Americans have never heard of, and the response is like Shanghai and Beijing, it's unbelievable to us. And so we want to be aggressive and at the same time we want to demonstrate the kind of company we are, in doing the right thing,” he said.
“And by that I mean, making sure we're investing in our people, providing our customers with a great place to enjoy coffee, and in terms of what we're going to do here in Yunnan, build the kind of relationship with coffee farmers where we demonstrate we're going to be paying a premium price for the highest quality coffee in the world, and I think do something that has not been done before.”
This venture marks the first time Starbucks will grow their own coffee beans, as they currently purchase their coffee from farmers in over 30 different countries.
Under the agreement, the Yunnan government will invest US$453 million in expanding green bean volume from the current 38,000 tonnes to 200,000 tonnes by 2020, Starbucks said in its press release.
The agreement comes at a time where commodities speculation has produced the highest coffee prices in over 15 years.
Though Schultz says that speculators are the main benefactors of the price increase, the promotion of the coffee in Pu'er city has already witnessed many farmers gravitating to the industry to achieve greater salaries.
"US coffee farmers don't really understand the cultivation of coffee. But according to current national indications we know that Pu'er City is vigorously promoting the growth and cultivation of coffee. Other than that, us farmers don't know much more," coffee farmer Chen Guoyin said.
The company hopes that this new venture will spark coffee growth in the region and bring the distinctive Yunnan coffee taste to international customers, a move that appeals to many local Starbucks customers.
"I think I would like to try this new product because after all this is China's own product, so I think if I were to try it and it tasted OK, there wouldn't be any problem," Starbucks customer Li said.
However, others, like customer Zhang Lu, worry that it may alter Starbucks' distinctive flavour.
"In terms of the Asian Yunnan coffee, before I travelled to Yunnan and I tried their coffee, and I thought the taste was really bland. It was like that type of sub-tropical coffee beans, and the taste is definitely different from other coffee. So if they sell this coffee, then I won't choose Starbucks," she said.
Some customers may object but the US coffee-giant has its sights set on China's lucrative market and is determined to lure the nation of tea-drinkers towards it's own brand of bean.