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Starbucks to expand role in Chinese coffee

Starbucks has announced it will launch a joint venture into south China that will give it control over production and processing of coffee, according to a report in The Financial Times Ltd.

Starbucks representatives say the coffee chain has signed an agreement with Ai Ni Group, a farming company in Yunnan province, to form a joint venture by the end of this year.

The joint new business enterprise will operate a coffee mill that will enable it to export raw and roasted coffee beans, which will be used by Starbucks and sold to rival coffee makers.

“Coffee from China will become one of the coffees you look for,” Starbucks says.

Currently, coffee sold in Asia is roasted in the US. Most of China’s coffee beans are exported, but this could well change as the Chinese population develops a stronger likening to the drink and the industry continues to expand.

According to reports, China is not yet considered a country coffee “brand” in the same way as Vietnam and Indonesia, but figures by the Beijing Coffee Industry Association indicate that coffee exports are rising to 45,000 tonnes of a year.

The Yunnan province in China is traditionally famous for growing tea, however as a result of high prices, the area has turned into a prominent coffee growing region. “The geological conditions and climate of Yunnan can yield high-quality coffee beans,” says Ji Ming, head of the Beijing Coffee Industry Association.
“High-quality beans are in short supply across the world, which is why Starbucks comes to Yunnan to search for beans,” he says.

Because of the rising demand of commodities in China, the price of Arabica beans reached a 34-year peak in March this year. This high rise in price is partly the reason Starbucks has decided to control the supply of the beans from the Ai Ni Group.

Starbucks says this is a “win win” initiative that will provide supplies and profits to Starbucks, while also helping improve the productivity and incomes of the Chinese farmers involved.

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