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Coffee and Tea Reports from the Front Lines

Café Soluble Wins $1 Million Loan

Nicaragua - The Inter-American Investment Corp. has approved a $1 million loan to Café Soluble S.A., one of Nicaragua’s most important coffee exporters. The money will be used to enhance the company’s competitiveness by modernizing its industrial equipment and information systems, and by expanding its storage capacity.

Café Soluble, based in Managua, employs 450 people in the production of roasted, ground and soluble coffee. Roughly 55% of the company’s production is exported.

Founded in 1959, the company originally exported instant coffee to the United States under the MJB label and instant coffee in bulk to Germany and Japan. It now considers its top markets to be El Salvador and Guatemala, with shipments also going to Great Britain, Germany, Austria, Taiwan, Bolivia, Trinidad and Syria.

At the moment, only two companies in Central America produce instant coffee besides Café Soluble: Guatemala’s Incasa, which doesn’t export, and the El Salvador operations of Nestlé.

This is the second IIC loan to the company; the first was used to upgrade the industrial plant and replace obsolete equipment.

The loan was announced in October by the IIC, an arm of the Inter-American Development Bank. It provides financing in the form of equity investments, loans, guarantees and advisory services to private enterprises throughout Latin America and the Caribbean. The IIC says its mission is “to promote the economic development of its regional borrowing member countries by stimulating the establishment, expansion and modernization of private enterprises, particularly those that are small and medium in size.”

- By Larry Luxner

Arabica Prices Will Continue Rising, says ICO

United Kingdom - Arabica coffee prices, which surged 60% last year, should continue to rise, while prices of lower-quality Robusta beans will remain damped due to excess supply, predicts the International Coffee Organization (ICO), reports the Financial Express.

“Market fundamentals are favorable” to the “upward trend in world Arabica prices recorded in the last quarter of 2004,” ICO executive director Nestor Osorio said.

Total world coffee production in crop year 2004/05 will be 114.10 million bags, according to the ICO. Consumption last year is estimated at 113.7 million bags.

The gap between global demand and supply will probably widen to 7 million bags in 2005/06 as bad weather and reduced maintenance of plantations hurt Brazil’s harvest.

Osorio said he estimates world production next crop year of about 107 million bags, compared with world demand of 114 million bags. Brazil’s production will fall from 38.26 million bags in 2004/05 to between 30.7 and 33 million bags, he said. Arabica coffees account for about 65% of world production.

VietnamTea Trademark Announced

Vietnam - The Vietnam Tea Association (VITAS) recently announced the right to own the national tea trademark “Che Viet Nam” and introduce it to domestic and foreign consumers, reports VNEconomy.

Vitas Deputy President Nguyen Van Thu said that products carrying the trademark will have guaranteed high quality and conform to international food security standards. They will ensure the customers’ satisfaction with the products.

VITAS will work closely with management agencies to regulate standards for products carrying the trademark as they are used in the domestic and foreign markets.

Vietnam was estimated to earn $85 million from tea exports in 2004. Vietnam’s tea products have been sold in 92 countries and territories, with 79% of sales being black tea and 20% green.

The country is among the 10 leading countries in the world in tea acreage and output. With about 120,000 tons cultivated in 34 out of 64 provinces and cities, Vietnam processes some 500,000 tons of tea buds annually, with 80 percent of this volume for exports.

First Instant Coffee Factory in East Africa to Open

Uganda - The first instant coffee factory worth $17 million has been licensed by Uganda Investment Authority (UIA), a UIA official, Sheila Mugyenyi, has said, reports the New Vision.

Mugyenyi said the factory, which would be the first in East Africa and one of the largest in Africa would be fully-operational next year.

She said the investors, CCL Products India and a British firm, Associated Coffee Merchants International, received land in Bweyogerere, a Kampala suburb.

However, the partners who were supposed to get 76% shares of Associated Coffee Merchants International and 24% from CCL Products India will get less shares because Uganda Coffee Development Authority (UCDA) received 10% of shares in the venture.

“UCDA is their local partner. The factory will process and pack instant coffee. The investors plan to employ 2,000 Ugandans at peak production,” Mugyenyi said.

She said the investors would get tax incentives with investment capital allowances like a 50% to 75% initial allowance on plant and machinery, 100% training expenditure and start-up costs spread over four years.

There will be no duties on imported equipment, while “value-added” tax will be delayed.

Mugyenyi said the incentives to the new investors aim at encouraging re-investment in the country.

Most of the coffee will be exported.

Republic Of Tea Wins Rooibos Judgment

United States - The Republic of Tea, U.S. tea packers, has been granted a summary judgment in its favor by a United States District Court against Dallas-based Burke International, owned by Virginia Burke-Watkins. Watkins, who has been suing U.S. tea companies, cafes and Internet traders for trademark infringement for the use of the name “Rooibos” in brand names and promotional material after sending them “cease and desist” letters and demanding royalties for using the name, was challenged in federal court by the California specialty tea company who sued for expungement.

The Republic of Tea, the first U.S. packer to launch a full line of “Rooibos” red tea in 2001, took on Burke International and Watkins in a bid to have the government’s decision to issue her trademark rights overturned. The Republic of Tea’s win over Burke International frees the usage of the word “Rooibos” for tea and herb companies that use “Rooibos” as an ingredient.

“We take our leadership role in this industry seriously and will not hesitate to defend the rightness of our positioning,” stated Ron Rubin, c.e.o. and owner of The Republic of Tea.

By way of reminder, the official Tea Association of the USA Tea & Herbal Tea Definition follows:

Historically, the tea term has served as an umbrella definition covering leaf tea on the bush, Black, Green, and Oolong tea after processing (& White) and the beverage itself after extraction. It is the position of the Tea Association that use of the term tea should be restricted to leaf and extracted beverage of the shrub Camellia sinensis. No other beverages merit the unqualified term tea.

A key component of Camellia sinensis is caffeine and, by definition, such tea may not be termed “caffeine-free”. For products that have undergone a process, which removes caffeine from the tea leaf, the term “decaffeinated” may be used, providing that the resultant level of caffeine falls within acceptable guidelines established by the Tea Association.

Tisanes may use the word “tea” only in conjunction with a modifying description, e.g. “Herbal Tea”, “Lemon Mint Herbal Tea”, “Rooibos Herbal Tea” etc. Equally, since many of the tisanes do not contain caffeine, the term “caffeine-free” may be appropriately applied to these, e.g. “Caffeine-free Herbal Tea”, “Caffeine-free Rooibos Herbal Tea” etc. (Note: This official position was adopted by the Board of Directors in May 1989 and has served as an industry guideline ever since.)

Tea & Coffee - March/April, 2005
Theta Ridge Coffee


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