Taiwan’s Coffee Landscape

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Features

By Jason Sarley

Taiwan is a majestic and beautiful country, with modern and traditional elements that co-exist uniquely. A majority of the island nation is lush with natural flora — a short trip out of the city might land you in misty mountains or dense forests. The restaurants of Taiwan range from classic and casual to Michelin-starred restaurants. If you have the time and patience, Taiwan is, without question, one of the premier destinations on the globe. From ancient Buddhist temples to luxury resorts, and everything in between, there are surprising discoveries to be made that satisfy all the senses.

A Rich, Layered History

The island’s history dates back tens of thousands of years, to the Neolithic period. Although Taiwan did not develop in the modern era as some project of foreign interests, per se — the island and its people have a living memory of cultural integrity that’s important to distinguish from the manifestation of outside influence — it certainly has been shaped by foreign actors.

During the nearly 40 years of occupation by the Japanese, a culture obsessed with coffee, the Taiwanese developed a taste for the beverage. And this consumption (of mostly instant coffee) during wartime continued on through the century. The few coffeehouses serving brewed coffee had a “Western” feeling of exoticism and sophistication. That began to shift rapidly in the 1990s with the expansion of major brands and convenience markets, with much of the roasted coffee coming from companies based in Japan, the U.S., or Europe. That environment of accessible, though not exceptional, coffees eventually seeded consumers’ desire for good-tasting coffee and generated the necessary demand to support higher-end Taiwanese-owned roasteries and coffee brands, a trend that continues to burgeon.

Figures and Facts

The coffee market in Taiwan is still dominated by convenience stores and hypermarkets selling roasted coffee and coffee beverages — one of the highest densities of such shops in the world, with approximately one convenience store per 2,304 residents. The growth of these kinds of outlets remains strong, in part because they offer fast service, ready-to-drink beverages, and competitive batch coffee and espresso drinks. Some of these outlets also provide single-origin coffees with cupping scores presented in store - a direct appeal to the knowledge level of consumers.

In 2015, Starbucks Taiwan reported that the growth in coffee consumption accounted for over US$2.2 billion of direct business opportunities in the local Taiwanese coffee market annually. But just as in mainland China, Japan, and South Korea, growth in the instant coffee market has effectively flattened out, with nearly all new growth appearing in the fresh-roasted and brewed beverage categories.

Coffee imports, valued at over $235 million, consist of 40% roasted coffee (whole-bean, ground, and instant format) and 60% green (unroasted) coffee; the volume of coffee imports grew 474% from 2012-2016, with similar growth expected over the next decade. Of the coffee imports of roasted coffees from foreign roasters in 2018, nearly 45% is from the United States, followed by 21.5% from Japan, 12.2% from Malaysia, 8.5% from Italy, and 3.5% from Switzerland. 2018 green coffee imports were distributed fairly evenly among the top five source countries, with ~17.9% from Indonesia, 17.1% from Brazil, 13% from Ethiopia, 12.6% from Colombia, and 11.6% from Guatemala

I spoke with Ting-Hsuan Kuo (or Angela), from esteemed family-owned and -operated importer and roastery Shinn-Jiun Enterprises, based in Tainan City, that specializes in ultra-premium selections from more lesser-known origins. She informed me that, when her family launched the business, they chose the risky path of sourcing the highest-quality green coffees, betting on the continued growth of the specialty segment of the coffee market. So far, this decision has paid off. Shinn-Jiun Enterprises has experienced a rapid shift in demand over the last five years toward higher-quality sourcing and lighter roasted coffees, and Kuo expects this trend to continue. She believes that the coffee market and consumer knowledge of coffee is still slightly fragmented, allowing the flexibility for Taiwanese coffee entrepreneurs to redefine what specialty coffee means for Taiwan.

Per capita, Taiwan ranks as one of the wealthiest countries in the world; with a population of 23.5 million, it ranks as the 22nd largest economy in the world and the 7th largest in Asia. Shifting demographics, such as: smaller families, increased number of working women, and the development of e-commerce have led to higher average incomes and a desire for prepared foods and beverages, along with a demand for healthier choices. Like other wealthy countries, Taiwan is aging - with more than 20 percent of the population expected to be 65 or older by 2026. Providing satisfactory goods and services to retirees with disposable incomes will become a necessary perspective looking towards the next decade. The Taiwan Coffee Association states that Taiwan’s growing coffee industry still has potential, as consumers on average drink only 125 cups of coffee annually, well under the “global benchmark” of 200 cups of coffee consumed per capita. 

Quality & Experimentation

Coffee — the roasted seeds of a little fruit — as a beverage has rapidly expanded as an iconic drink of choice, especially for younger people. While the phenomenon of increased coffee consumption and demand for higher quality is occurring world-wide, nowhere is it more pronounced than in Asia — and Taiwan is, in many respects, a leader in this shift. Although a relatively small country, over 12% of licensed Q-Graders worldwide are based in Taiwan. Many universities offer college credits and courses through Hospitality degrees that are directly related to the coffee industry, including barista skills, roasting, and customer experience.

I spoke with Huan Lin, owner of the highly respected cafe Tzubi Coffee in downtown Taipei and a celebrity barista champion, expert trainer, and teacher of university coffee courses. His customers are looking for a compelling original experience when they visit his shop. Many are looking for distinctive cups of coffee, with purchases of pure black coffee increasing. He says, “Drinking coffee in Taiwan comes down to three core aspects: the essentiality of coffee bringing life in the morning, social interactions between family and friends, and the lifestyle of learning and living with the knowledge of coffee and its tools.”

While Taiwan is predominantly a consuming country, it also produces coffee. Although Taiwan-grown coffee is currently only able to meet approximately 15% of the local market demand, production by acreage has nearly tripled over the last decade, from 387.57 total acres in 2006 to 1104.22 acres in 2016. (The aggregated production has increased from 256.55 tons in 2006 to 840 tons in 2016.) Meanwhile, the farm-level price has risen drastically from ~50 NTD/kg in 2005 to ~925 NTD/kg in 2016. However, the local coffee industry still functions mostly as a tourist curiosity, since the cost of production and labor is quite high and there is limited arable land (as in Hawai’i). One response by some farmers is to exclusively grow high-end varietals for the ultra-premium market.

I spoke with Mr. Fang Zheng Lun, also known as the “Coffee Prince” of Taiwan, who owns and operates Zou Coffee, a plantation and nano-roastery based in the mountains of Alishan. He earned this moniker by repeatedly winning first place for his green coffee in the national green coffee competition. He runs an experimental workshop for other Taiwanese coffee farmers to provide them the knowledge they need to produce exceptional coffees. More than 70% of the coffee trees on his farm are various geisha types, the genetics of which he has tested regularly by World Coffee Research; he pulls out stock that doesn’t match the exceptional taste profile he’s looking for. The work he’s doing there is a testament to the approach required for producing the absolute best possible expression of coffee.

He acknowledged Miguel Meza of Paradise Coffee in Minnesota for offering vital insights when he first began coffee farming that led him toward quality and experimentation.

Taiwan’s Coffee Future

From a consumer perspective, Taiwan offers some of the highest-quality roasted coffee in the world. This, combined with the potential of producing more green coffee at origin, indicates that the growth trajectory of this island nation’s coffee market has just begun its ascent. There are unrealized opportunities awaiting those with the capacity to capitalize on this expanding market.