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Coffee and Tea Reports from the Front Lines

Barista Expanding in Domestic, Overseas Markets

Delhi - With the coffee chain business becoming highly competitive, Barista Coffee is expanding in the overseas and domestic markets. The coffee brand is looking to consolidate its presence in the Indian market. “We will open 80 new outlets during the current fiscal. This would take the number of our outlets to 300. Of this, 20 would be opened in towns and cities where the company does not have any presence,” Partha Dattagupta, CEO, Barista Coffee, said at a recent industry function. The company, which has presence in West Asia, UAE and Oman, is looking to open two of its café outlets in Bangladesh.

Speaking on the company, Dattagupta said the business has moved forward since its takeover by Italian coffee major Luigi Lavazza SpA, with the company registering a 30% growth.

According to the Coffee Board, coffee retailing is witnessing a boom in the country and is estimated to grow by about 30-40% annually. Noting that food and beverage is a high investment business, Dattagupta said the company operates in three models - high street outlets, corporate and company owned stores. The company would add 10 more exclusive outlets to the existing 11. It will adopt a three-tier pricing strategy depending on the location of the outlet.

UCC To Emerge As Number Three Cafe Chain

Tokyo - According to The Nikkei, UCC Ueshima Coffee Co. reached an agreement to turn Kohikan Corp., Japan’s third-largest cafe operator, into a subsidiary by acquiring an 89% stake. The deal will catapult the fifth-ranked UCC to number three among specialty coffee chains, after Doutor Coffee Co., a unit of Doutor-Nichires Holdings Co. and Starbucks Coffee Japan Ltd.

UCC will buy the stake for an undisclosed sum from the founding family and other shareholders of Kohikan. It plans to continue raising its interest to take a 100% stake later this year.

UCC, which operates 300 cafes in Japan and abroad, will acquire franchise management know-how from Kohikan, which runs about 350 locations. The plan is to eventually increase its locations to 1,000. It expects to enjoy substantial cost savings through combined procurement amid rising food and materials prices.

Seisuke Ueshima, president of UCC subsidiary UCC Foodservice Systems Inc., will take the helm at Kohikan. Kohikan president Naoko Manabe will become a board member without representative rights.

Eastern African Fine Coffees Association Partners with Starbucks

Nairobi - The Eastern African Fine Coffees Association (EAFCA) recently partnered with Starbucks Coffee Company to recognize farmers producing coffees of exemplary quality. Starbucks in Lausanne, Switzerland will host eastern African farmers whose coffees received honors during recent EAFCA Taste of Harvest program for one week of specialty coffee training.

EAFCA established the Taste of Harvest program in 2004 to celebrate the producers of specialty coffee produced in Eastern and Southern Africa. This year’s winners, announced at the 5thAfrican Fine Coffee Conference & Exhibition, are from Burundi, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia.

“Starbucks is pleased to be hosting these outstanding representatives of the East African coffee industry,” said Alain Poncelet, vice president, coffee & tea and managing director of Starbucks Coffee Trading Company. “This is another step in our efforts to expand our involvement in the African coffee sector, which also includes the opening of our Farmer Support Centers in Ethiopia and Rwanda later this year.”

Ultimately, the goal is to help producers to see the impact that improving production techniques, environmental practices and general agronomic practices have on the quality, taste and marketability of their coffee. They will experience first-hand the value that sustainable efforts have on the end product - the coffee in the cup.

EAFCA is an association of coffee producers, processors, marketing people and organization in 10 African countries and outside of Africa.

World Tea Prices Soar as Kenyan Outputs Drops

Kenya - Tea prices are headed for a record high following a historical drop in Kenya’s production, reduced supplies at the Mombassa tea auction and a rise in international market prices.

According to the Tea Board of Kenya, the country’s tea has suffered its steepest drop in production, falling 35% for the first quarter of 2008, defying the board’s prediction in February that production would rise with the onset of the long rains.

Although the drop has been linked to the post-election violence that hit the country early in the year, the board’s managing director Sicily Kariuki has consistently said that the clashes made no insignificant contribution to the decline, blaming it instead on harsh weather.

Export earnings from tea have significantly increased at the global level. A lower volume of exports from Kenya due to a decline in tea production is an important contributing factor in increasing international tea prices. The demand for tea from oil-producing Middle Eastern countries, Russia and East Europe is another significant factor in the increase in tea prices.

Tea production for the first quarter of 2008 dropped from the 108 million kg in 2007 to 70 million kg. The highest drop in production was in regions west of the Rift Valley, where production fell by 50%, from 62 million kg registered during the same period last year to 31 million kg.

East of the Rift Valley there was a lesser decline of 14%, from 46 million kg to 40 million kg. The plantation sub-sector, which is predominant in the west of Rift Valley, was the most affected by the decline, with its production dropping by 46% from 40 million kg compared with 21 million kg recorded in the first quarter of 2007.

The smallholder sub-sector in the east of Rift registered a lower production drop of 28%, from 67 million kg to 48 million kg. During the period, the lowest output of 16.9 million kg was recorded in February and 29.7 million kg recorded in January.

The Tea Board says that the low production during the quarter is attributable to hot and dry weather conditions that were prevalent in most tea growing areas as well as the frost that affected parts of the west Rift, particularly in Nandi, Kericho and the surrounding districts in February.

Tea & Coffee - June, 2008
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