Selling coffee in China: What really works?
Timothy Mukisa, the director of Nile Café during an interview in Kampala. Photo by Eronie Kamukama
What you need to know:
- China’s coffee-drinking culture grows at 20 per cent per annum. Although China is a predominantly tea-drinking country, the growing coffee consumption numbers show that there is an opportunity that can be exploited. Mr Timothy Mukisa, the director of Nile Café, a Ugandan coffee company based in China, in an interview with Prosper Magazine shares how they’ve been able to penetrate the Chinese market.
Tell us a little bit about Nile Café.
Nile Café is a coffee company based in China. We market and sell Ugandan coffee in China. As a student who studied a Master’s degree in Enterprise Management, I found a need in China to set up a company that can sell Ugandan products which are value-added and coffee was our key product.
Currently, our company is based in Shanghai, the commercial city of China. Together with the support of the government through Uganda Coffee Development Authority (UCDA), we have moved 40 cities in China at different exhibitions through the whole of last year.
This year, we are having close to 50 different exhibitions in 61 cities across China where we will promote Ugandan coffee, value-added coffee and make sure we promote the country through coffee that is our main interest.
How do you find the Chinese coffee market?
Most Chinese especially the youth have realised that there is good coffee from Africa. All along they knew that coffee is from Europe and the USA, so we are breaking the ice and opening up their minds to know that the right coffee is from Uganda and Africa.
We have also sensitised them that Europe and the USA buy coffee from Africa and re-export it to China. The excitement of Chinese youth who have been exposed to the Western lifestyle, has made them look up to the USA in everything they do.
So, many are now accustomed to drinking coffee because it brings them closer to the Western world lifestyle. Now Uganda is bringing a better quality coffee closer to them.
Do you deal in raw or roasted coffee beans?
Currently, as a starting company, we are doing the value addition in China because of the tax levied on the roasted coffee. We are exporting green beans then process, package and market the coffee in China.
We work in partnership with another exporter who is also based in China; he mainly exports green beans, we buy from him in China and then process. As we aim to grow our business, we are now in Uganda to look for proper sourcing for our coffee.
This year we are going to start buying the actual coffee directly from Uganda. Because of the big orders we are receiving from some of our clients; we have to be ready in terms of quality and quantity to supply our market.
How many kilogramme bags do you export?
When you are doing the process, we sell or pack our coffee in 250gm and 2kgs packaging bags. So, last year alone we sold close to 13,000 bags. The pricing is relative depending on the market. The Chinese market is price sensitive; so right now, we don’t have a fixed price but on average, the price of our processed bags (250gm) is around $5 (Shs18,500).
To attract more customers, we have come up with Coffee bags (like teabags). This is an innovation we thought about because our customers want a simple life. Coffee machines are a bit hard because one needs to be at home or office to grind coffee and process it. So, coffee bags come in handy for customers traveling on planes, buses, just like a teabag; this too is convenient.
This kind of coffee was really accepted well by the market. The coffee bags are packaged in sachets and then put in boxes. Each packet contains about 10 to 20 bags sold at a cost of $8 (Shs14,800) to $10 (Shs37,000) depending on the number of coffee bags in a box.
How big has the business grown in terms of investment?
Two years ago equipped with my life savings and contribution from a family worth $20,000 (Shs74 million), I started Nile Café Company. Right now, this investment has multiplied to $130,000 (Shs480 million). But this doesn’t come on a silver platter. There are many things that we are spending on; promotion is the most expensive part in China because data is gold in China.
When you look at our packages, we spend a lot of money on branding and marketing; that’s the biggest problem. Also, the production is quite costly. The business has created jobs for 11 people from Chinese, Belgians, Europeans, Congolese and many Ugandans; all these are based in China.
In Uganda, we have about five employees. Since we are expanding to Dubai to cater for the United Arab Emirates (UAE) market, more jobs will be created.
Where do you see your coffee business in the next five to ten years?
We have big hopes that this year we may reach our targets.
Already, we are speaking to farmers of green beans to start supplying us every month to hit our target of at least 45 containers of green beans in export.
If we work collectively and other people come on board, we shall be able to achieve it. We have been buying coffee from other exporters because it seemed much easier and less draining.
But since we are here this holiday, we are looking for farmer’s cooperatives and unions so that we can get to the farm directly.
Venturing to China
Chinese business secret
I studied in China and during this time, I mastered the Chinese business secret and how they have made it that far. This coupled with several Chinese friends inspired me to do business in China.
I wanted to do something which will be valuable to my country and not only buy things from China and bring them to Uganda. I also wanted to change the way things were being done in China; to have our products in Uganda access the market.
Based on my network of friends plus my proficiency in the Chinese language, I thought I could be a resource or platform to have our products access China. So, through that, I assessed that though coffee is one of the products in China that is really moving fast on big international companies’ shelves like Starbucks that are located there.
