Specialty coffee boom in China and UAE as seen by craft producers from Europe

2 stycznia 2020
KawePale Palarnia Kawy | [object Object] , 2020-01-02T17:37:07.000Z

When it comes to coffee culture, one would think that China and the United Arab Emirates have nothing in common. Recent hype among Chinese upper-middle class doesn’t compare to a centuries-long tradition of brewing coffee in the Arab world. However, in both countries, demand for the highest quality coffee grows rapidly and big brands will not be able to meet it themselves. Two young coffee fanatics from Poland decided to jump at the opportunity.

Warsaw-based specialty coffee roastery KawePale used to be one of the local producers that filled the need for a premium product for countless cafes in the cities around them. However, the European tastes developed fast and so did the scope and scale of their production. What was considered ‘hipster’ in 2015 is just ‘decent’ now. How did the love for sophisticated brew spread to cities like Shanghai, Dubai or Abu Dhabi, though?

Both China and UAE are known for their wild urban development. The ‘before and after’ pictures of cities like Shanghai or Dubai over 20-30 years are just breathtaking. Although high-rise buildings are arguably the most spectacular evidence of the growing economies, they don’t tell the whole story. Rapid urbanisation also means changing lifestyles and different needs. And coffee is part of the mix.

Tea culture in China dates back to ancient times, but coffee is the hottest (pun intended) beverage these days. The year-on-year growth of coffee consumption in China amounts to 20%, which is 2% above the global rate. Considering how huge the Chinese economy is, the market size will cap trillions of yuan in less than 10 years (Chinabgao). At the same time, sales at the cafes in the UAE have been growing by 70 per cent (!) a year (Gulf News). But it’s not only the fast-growing consumption that’s interesting. In Dubai and Abu Dhabi, coffee is more often served just like beer – cold, in a bottle or from a tap. And international brands, such as Costa Coffee, are less and less competitive against craft roasteries. Cosmopolitan consumers simply need something fancier.

“Although both Chinese and UAE markets have huge potential, there are some major differences we needed to take into account to export our product successfully. During our business trips, we noticed that in Shanghai there are many crowded cafes brewing specialty coffee, but food industry specialists don’t really know about the segment. We realised that we need to teach them a bit to raise awareness. In Dubai and Abu Dhabi, it was quite the opposite – wholesale buyers knew what we produce, but, surprisingly, there are not as many cafes as in Shanghai yet. It all influenced our market entry business models.” – explained Piotr Wilczewski, founder and CEO of KawePale.

“Another crucial thing is, of course, the taste. Chinese people are used to completely different flavours, so naturally, they prefer different kinds of coffees. Same with UAE – cold brew is a seasonal, alternative drink in Europe, but because of the constant hot weather, it’s mainstream in Gulf countries. The artisanal nature of our roasting process makes us more flexible. And flexibility is our competitive edge against mammoth brands, such as Starbucks.” – commented Piotr Mietelski, vice-president and barista at KawePale.

Ironically, it seems that accelerating globalisation makes it harder for international brands to penetrate new markets and dictate trends. Cosmopolitan coffee drinkers start to ask where it comes from, how it’s made and who are the people behind the brand. It’s easier to answer these questions working with smaller, but more dedicated producers.

Project co-financed by the European Regional Development Fund in the framework of the operational programme Smart Growth.

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