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Starbucks established its first coffee farm in Yunnan in order to gain bigger access to the Chinese market.
The increase of the agricultural products’ value and the huge consumption market in China are attracting the foreign food giants to set foot in the planting industry in China.
On November 12, Starbucks signed a Memorandum of Understanding with the Yunnan Provincial Academy of Agriculture and the government of Puer, Yunnan. Starbucks plans to build and operate a coffee farm in Yunnan.
Howard Shultz, board chairman and CEO of Starbucks said that coffee beans from the farm in Yunnan will not only be sold in China, but also distributed to the overseas market.
1000 Stores in China
Howard Schultz said that Starbucks also planned to establish a Coffee Research and Development Center, a Support Center for Coffee Beans Planters and a plant for the initial processing of coffee beans. The US coffee giant plans to build China into its “second local market” apart from the USA.
“China means more-than-expected opportunities for us. We have already achieved great success in China’s secondary and third-tier cities in addition to Beijing, Shanghai and Guangzhou. It enhanced our confidence to accelerate our expansion in China.” Starbucks has already owned 400 cafés in Mainland China and plans to increase the number of cafés in China to 1000.
It is known that the seedlings Starbucks introduced into will be planted in March 2011 and will blossom one year later.
Not to Lower Cost
China’s agricultural products have seen regressive prices in these years. There were higher and higher requirement about the added value in the raw material supply of the agriculture. This has already applied influence upon the brand owners. Against this background, the food and food retailing brands have already begun to march into the upper stream of the industry. For example, COFCO Group, China’s foremost grain, oils and foodstuffs import and export group, put forward the plan of building the “complete industry chain”. Little Sheep, a famous catering restaurant chain in China, has already entered into the field of lamp and cow feeding, butchering and processing.
However, although the price of coffee beans has climbed to the historical in these 13 years, Starbucks, according to Shultz, doesn’t aim at lowering the cost through setting up the coffee farm in Yunnan. “What we cultivate in Yunnan are high-quality coffee beans which may push the cost higher,” said Schultz. The high quality and special flavor of coffee beans in Yunnan was greatly praised by Starbucks. The coffee giant began to purchase coffee beans in 2007 and now the purchasing volume is 20 times as big as the one three years ago.
Chen Geng, partner of the management consulting company Adfaith said: “Many food and retailing companies march into the upper stream industry for the guarantee of products. Compromise is easy to see if using external suppliers for the market. If the raw materials from the upper stream industry have problems, the brands you devote great efforts to may be greatly damaged.”
Ya Yanglin vice mayor of Puer, expressed his welcome for Starbucks’ arrival. He hopes to rely on the brand, technology, capital and market of Starbucks to promote the development of coffee industry in Puer, turning this city into the “Capital of Coffee in China”. It is known that the Yunnan provincial government plans to invest 3 billion yuan (USD 451.8 million) increasing the output of coffee beans from present 38 thousand tons to 200 thousand tons in 2020. The area of coffee bean farms will be increased from 65.9 thousand acres to 247 thousand acres.
The increase of the agricultural products’ value and the huge consumption market in China are attracting the foreign food giants to set foot in the planting industry in China.
On November 12, Starbucks signed a Memorandum of Understanding with the Yunnan Provincial Academy of Agriculture and the government of Puer, Yunnan. Starbucks plans to build and operate a coffee farm in Yunnan.
Howard Shultz, board chairman and CEO of Starbucks said that coffee beans from the farm in Yunnan will not only be sold in China, but also distributed to the overseas market.
1000 Stores in China
Howard Schultz said that Starbucks also planned to establish a Coffee Research and Development Center, a Support Center for Coffee Beans Planters and a plant for the initial processing of coffee beans. The US coffee giant plans to build China into its “second local market” apart from the USA.
“China means more-than-expected opportunities for us. We have already achieved great success in China’s secondary and third-tier cities in addition to Beijing, Shanghai and Guangzhou. It enhanced our confidence to accelerate our expansion in China.” Starbucks has already owned 400 cafés in Mainland China and plans to increase the number of cafés in China to 1000.
It is known that the seedlings Starbucks introduced into will be planted in March 2011 and will blossom one year later.
Not to Lower Cost
China’s agricultural products have seen regressive prices in these years. There were higher and higher requirement about the added value in the raw material supply of the agriculture. This has already applied influence upon the brand owners. Against this background, the food and food retailing brands have already begun to march into the upper stream of the industry. For example, COFCO Group, China’s foremost grain, oils and foodstuffs import and export group, put forward the plan of building the “complete industry chain”. Little Sheep, a famous catering restaurant chain in China, has already entered into the field of lamp and cow feeding, butchering and processing.
However, although the price of coffee beans has climbed to the historical in these 13 years, Starbucks, according to Shultz, doesn’t aim at lowering the cost through setting up the coffee farm in Yunnan. “What we cultivate in Yunnan are high-quality coffee beans which may push the cost higher,” said Schultz. The high quality and special flavor of coffee beans in Yunnan was greatly praised by Starbucks. The coffee giant began to purchase coffee beans in 2007 and now the purchasing volume is 20 times as big as the one three years ago.
Chen Geng, partner of the management consulting company Adfaith said: “Many food and retailing companies march into the upper stream industry for the guarantee of products. Compromise is easy to see if using external suppliers for the market. If the raw materials from the upper stream industry have problems, the brands you devote great efforts to may be greatly damaged.”
Ya Yanglin vice mayor of Puer, expressed his welcome for Starbucks’ arrival. He hopes to rely on the brand, technology, capital and market of Starbucks to promote the development of coffee industry in Puer, turning this city into the “Capital of Coffee in China”. It is known that the Yunnan provincial government plans to invest 3 billion yuan (USD 451.8 million) increasing the output of coffee beans from present 38 thousand tons to 200 thousand tons in 2020. The area of coffee bean farms will be increased from 65.9 thousand acres to 247 thousand acres.