Ethiopia eyes value addition to harness coffee potential amid growing demand from China

Published: July 17,2024

In a bustling coffee processing plant filled with the aroma of top-notch Arabica coffee in Addis Ababa, the Ethiopian capital, a group of women were busy sorting out defective green coffee beans to ensure that only the finest-quality beans move on to the roasting and packaging stages.

One of these dedicated women can sort defects from up to 150 kg of raw coffee beans each day at the Haderocoffee processing plant. The sorted green coffee beans would then pass through the inspections, roasting, grinding, and packaging stages before they are ready for buyers on the shelves of supermarkets and coffee shops in Ethiopia and around the world.

Named after a small coffee-producing town in southern Ethiopia, Hadero is among the rapidly growing list of coffee processing businesses in Ethiopia that are specialized in coffee sector value addition, as part of a broader push to transform the country’s coffee industry.

“We are a homegrown company, and we aspire to increase Ethiopia’s earnings from the export of coffee through value addition and proper marketing,” said Mubarek Ahmed, the company’s director of business development.

Ethiopia stands as Africa’s largest producer of Arabica coffee, with coffee production serving as a linchpin of the country’s agriculture-led economy. There are about 5 million smallholder coffee growers in Ethiopia, and more than 25 million people in the country are involved in coffee production, processing, and sales for their livelihoods, according to official figures.

During the just-concluded Ethiopian 2023/2024 fiscal year that ended on July 7, the country earned 1.43 billion U.S. dollars in revenue from the export of 298,500 metric tons of coffee, an increase of about 20 percent in volume compared to the previous fiscal year, according to the Ethiopian Coffee and Tea Authority (ECTA).

For comparison, coffee’s export revenue normally constitutes more than one-third of the country’s entire export revenue, which stands around 4 billion U.S. dollars annually.

Ethiopia, which is known as the origin of Arabica coffee, is recognized worldwide for its rich coffee quality, variety of flavors, and aroma, making the country’s coffee in great demand across the globe.

The Ethiopian government and experts, however, often cite the lack of value addition in Ethiopia’s coffee sector as a major bottleneck that prevents the country from fully benefiting from its rich coffee resources, as it mainly exports raw coffee beans to the international market.

Amir Hamza, chairperson of the African Fine Coffees Association, said Ethiopia and other coffee-producing African countries need to concentrate on value addition and apply better marketing strategies to boost their earnings from coffee exports.

“Africa has the best coffees, but they are not marketed as they should be. After the green beans are exported from Africa, they will be blended and roasted by companies outside the continent, particularly in Europe and the United States, and then they will be sold in the Middle and Far East as coffee products from other origins,” said Hamza.

Amid the urgent need to transform the coffee sector and boost the country’s earnings from its coffee resources, Ethiopia has introduced initiatives aimed at promoting private sector engagement in value-addition efforts.

“Ethiopia has been exporting green coffee beans for many years. We have to add value to it, as the price for value-added coffee is much higher than for green coffee. This will contribute more to the Ethiopian economy,” Ahmed said.

He said that as a value-addition company, Hadero is continuously trying to expand the export of its processed coffee by improving the standard of its products. “We are sourcing the best green beans from the market. Our packaging, which we import from China, is also unique and helps keep our products fresh and of very good quality.”

ETHIOPIAN COFFEE GAINING FOOTHOLD, POPULARITY IN CHINA

Ethiopian coffee is recently gaining a foothold in the rapidly-expanding Chinese market, registering an annual growth of 27 percent over the past few years, as more and more young people develop a habit of drinking coffee in a country that is dominated by tea culture.

Over the past two years, China has been importing up to 20,000 metric tons of Ethiopian coffee annually, making it the eighth-largest importer of Ethiopian coffee, up from 33rd place just a few years ago, according to latest data from the ECTA.

Adugna Debela, director-general of the ECTA, in a recent interview with Xinhua, attributed the surge in Ethiopia’s coffee exports to China to a significant increase in Chinese coffee buyers who import coffee directly from Ethiopia.

Chinese platforms, such as the China International Import Expo and various e-commerce platforms, serve as effective gateways for overseas brands to enter China, providing opportunities that are harnessed by Ethiopian coffee exporters like Hadero.

In January 2019, Hadero was one of the three Ethiopian premium coffee brands that sold more than 11,200 bags of coffee within a few seconds at the Ethiopian Coffee Brands Launch on Alibaba’s TmallGlobal, one of China’s largest e-commerce platforms, in a joint initiative with the United Nations Economic Commission for Africa as well as the Chinese and Ethiopian governments.

Ahmed, the company’s director of business development, said China is now “an emerging and big coffee market” with greater market potential and incentives for Ethiopian coffee exporting companies.

China is now its third-largest export destination for Hadero, which supplies for both domestic and international markets, after the United Arab Emirates and Germany.

“We are closely following the Chinese market,” Ahmed said. “China is a big market, and we love to be a part of that.”

Xinhua