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Coffee Round Up

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Banrie plans 100 outlets

Thailand

Banrie Coffee Plantation and Farm Design (Thailand) The owner and franchiser of Banrie Coffee shops, is targeting LPG gas stations across the country in an expansion effort that will see the company establishing 100 outlets by the end of 2011. The company expects to see 50 outlets up and running by the end of 2010.

Banrie Coffee, which had operated 100 coffee shops previously prior to its contract with gas station operator PTT expiring, currently operates around 20 outlets in service stations nationwide. Company president Asawin Khairatsame said that the new Banrie Coffee shops are planned for LPG gas stations and petrol stations such as Petronas, Caltex and Cosmo.

"Besides expansion by the company, we will focus more on selling our franchises to investors who are looking to run coffee shops and reach break-even point rapidly," Khairatsame said. "If Banrie Coffee wants to have a larger chain of branches nationwide, franchisees can help the company to achieve the target."

The company expects its franchise business will contribute 20% of total sales revenue on projected revenues of Bt80 million (US$2.4 million) this year.

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Coffee futures coming

Singapore

Singapore Exchange started trading future contracts for robusta coffee last April 22.

"The launch of the Singapore Commodity Exchange is timely, as Southeast Asia has grown to become the largest producer and exporter of robusta coffee," said Jeremey Ang, c.e.o. of SICOM, quoted by Reuters.

The SICOM futures will be a physical delivery contract denominated in lots of five tons. The contracts will represent physical stores of coffee in warehouse in Ho Chi Minh City and Singapore.

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Robusta supplies down

Vietnam

A squeeze in credit and price drops have led Vietnamese exporters to delay or halt shipments of robusta beans totaling more than 150,000 metric tons.

Vietnam is the world’s largest producer of robusta and the news saw futures contracts rise 2.5% for the week ending March 19, the first weekly rise since January. The 10-ton contracts, first introduced January, 2008, had fallen to a record low the preceding week.

The news has some concerned about stability in the supply chain.

"This is something that could create big problems down the road," Shawn Hackett, president of commodities research at Hackett Financial Advisors Inc., told Business Week. "If roasters don’t get delivery of the supply they thought they were going to get, they have to go buy replacement coffee."

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400,000 tons unsold

Vietnam

Up to one third of Vietnam’s annual coffee output, or about 400,00 tons, is believed to have remained unsold by the end of April as farmers, unwilling to accept prices that are down 12% over last year, continued to hold on to their beans, according to Pham Dinh Khai, director of An Giang Coffee Co.’s Buon Ma Thuot branch.

In response to the situation, prime minister Nguyen Tan Dung has instructed the central bank to oversee a 200,000 ton program to boost robusta prices.

Unsold coffee "between 300,000 and 400,000 tons is pretty high compared with 100,000 to 200,000 tons at the same time in previous years," according to Pham. "This program is good in general, but a bit late in terms of timing. We should have this program undertaken at the peak of the harvest in November, December,"

Signature coffees

China

Estate Coffee Holdings Corp. (ECHD), a specialty coffee company with plans to grow by vertical integration, has announced that it is planning to supply its signature coffees to customers throughout Asia.

DTS8 Coffee (Shanghai) Co. Ltd. announced a distribution agreement with Bake & Co. International Trading Co., Ltd, as the exclusive distributor of three signature coffees: DTS8 Blue, DTS8 Red, and DTS8 Espresso Classic in China, Taiwan, Thailand, Vietnam, Cambodia, Laos, Philippines, Myanmar, Indonesia, East Timor, Hong Kong, Macau, Malaysia, Singapore, Brunei, Australia, New Zealand and UAE. ECHD owns a 20% interest in DTS8 Holdings Company Ltd. through its wholly owned subsidiary, Estate Coffee Holdings Ltd.

"DTS8 Coffee’s rich aroma and alluring taste with Bake & Co.’s fine Swiss pastries provides one with the highest level of bliss," according to the chairman of DTS8 Coffee.

Output, exports down?

India

G.V. Krishna Rau, chairman of the Coffee Board of India, has warned that India’s coffee production and exports in 2010 may be hurt by a lack of pre-monsoon rainfall in some of the main coffee growing areas.

Rainfall in Karnataka, Kerala and Tamil Nadu was not "consistent and uniform," according to Rau, "Most of the aberrations related to the blossom showers are localized," he said. "Some areas got good rains, while some areas saw a deficit and some didn’t get back-up showers."

"Showers in April have not been widespread this year as they usually are," added Anil Bhandari, a member of the board and a grower, quoted by Bloomberg. "There has not been enough back up rain to aid fruit-bearing in some areas."

However, despite this, year-to-date exports of all coffee in India jumped 36% compared to the same period last year, with arabica beans alone up more than 3,000 metric tons.

CCD draws US$50 mln

India

The private equity arm of Britain’s Standard Chartered Plc finalized a US$50 million investment in India’s Café Coffee Day (CCD), a privately-owned Indian coffee chain company based in Bangalore, with over 900 stores throughout the country, according to Arijit De, a spokesman for Standard’s Indian unit.

The move is part of a Rs10 billion (US$219 million) investment in CCD led by Kohlberg Kravis Roberts & Co. including, among others, Standard and New York’s New Silk Route. The overall deal will net investors 20% of the company.

Further details were not immediately forthcoming as parties involved declined to comment.

coffee round up

Banrie plans 100 outlets

Coffee futures coming

Robusta supplies down

400,000 tons unsold

Signature coffees

Output, exports down?

CCD draws US$50 mln

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