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Coffee and Tea Reports from the Front Lines

Hilton Signs Deal to Open Starbucks in Some Hotels

United States -- Hilton Hotels and Starbucks have entered into a master licensing agreement that will enable selected full-service hotels to operate Starbucks licensed stores. Under the new agreement with Starbucks, authorized Hilton, Doubletree and Embassy Suites Hotels will have the opportunity to open and operate a Starbucks store within their hotel location, provided they meet Starbucks business and licensing requirements. Paul Keeler, vice president of food and beverage for Hilton, says the company is excited about offering another amenity to guests. “Our guests will be delighted to enjoy their favorite Starbucks treats in the hotel when they are staying with us at a participating Hilton, Doubletree or Embassy Suites Hotels property,” he says.

Hilton Hotels Corp., which is based in Beverly Hills, California, is recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises approximately 2,300 hotels, resorts and vacation ownership properties.

Hilton Hotels (NYSE: HLT) operates a corporate headquarters in Memphis where three brands -- Embassy Suites, Homewood Suites and Hampton -- are headquartered.

Starbucks Enters Asian Ready-to-Drink Business

United States -- Starbucks Corp. said it plans to introduce its chilled, ready-to-drink coffee products in Japan and Taiwan through partnerships with manufacturers and distributors in those countries.

Starbucks has partnered with Suntory Ltd., which will manage the manufacturing and distribution of the coffee ready-to-drink products in Japan. Terms and conditions of the deal, however, were not disclosed.

Starbucks Coffee Japan Ltd., the subsidiary that has operated Starbucks stores in Japan since 1996, will provide consulting support. Starbucks’ joint venture partner in Taiwan, President Starbucks Coffee Taiwan Ltd., will handle the distribution in Taiwan, while Uni-President Enterprises Corp., a large Taiwanese food and beverage company, will manufacture the products.

Seattle-based Starbucks (NASDAQ: SBUX) announced that the ready-to-drink market in both countries combined is worth about $10 billion in sales. Japan and Taiwan represent the company’s first foray into the sales of products outside of Starbucks coffeehouses, in a region other than North America. “The success we have had bringing bottled Starbucks Frappuccino coffee drinks and Starbucks DoubleShot espresso drinks to consumers in channels outside of our retail stores in the U.S. and Canada, demonstrates our potential worldwide,” the company said.

Van Houtte Brews Up Profits

Canada - Van Houtte Inc. posted a 17% increase last month in fiscal 2005 earnings, from its roasting and distribution business in Canada and the U.S. Despite the upsurge in green coffee prices that hurt the final quarter, the full year’s earnings were $21.7 million, or $1.01 a share up from $18.6 million. The year was the best since 2001, and met many analysts’ forecasts. Also, since coffee is a volatile commodity, there was a time lag before Van Houtte could recover the green coffee increases at the wholesale distribution level, chief executive Jean-Yves Monette told analysts.

Van Houtte, which controls more than half the coffee-service market in Canada and about 3% of the U.S. market, rolled out wholesale price hikes of 30 to 40 cents a pound in the latest quarter. Monette is shooting for a gain in fiscal 2006 earnings of 10% to 15%. He wants to buy more distributors in the fragmented U.S. office coffee service market and build more business with supermarket chains. With further plans to acquire more service firms, the company has already installed their business and supplies in New Jersey, Illinois, Texas, Florida and Georgia. The U.S., with 4,000 local and regional players, offers great opportunities. In Canada, the priority is Toronto. “A 5.8% gain in coffee machines installed across Canada is a good sign, and a rise of 10-15% in fiscal 2006 earnings is achievable,” said Dundee Securities’ analyst, Bill Chisholm. “But the first quarter could still get a bad taste from the green coffee prices.”

Last November, Van Houtte signed a deal to install and maintain a coffee machine in each of the 1,031 stores of Lowe’s, the second-biggest U.S. home-renovation chain.

New Coffee Union Sparks Fear

Kenya - In an industry that is struggling to recover from a recession, the formation of a new coffee association sparks fresh fear and anxiety. The union, which formed in April of this year, is composed of four farmers, three commercial and one private miller, and three exporters. Some industry players opposed the formation of Kenya Coffee Producers and Traders Association (KCPTA) as another avenue to “milk the already impoverished farmers”.

This interim committee, despite this great controversy, is formed along with the new Coffee Act, which explains and gives guidelines on the operations of the sector. The chairman of the Coffee Board of Kenya, Wachira Mwago, welcomed the formation of a new association, saying it was provided through the law. He said the union would run the auction floor, a task previously undertaken by the board before the sector’s reforms. Mwago accused those that opposed the KCPTA, as people who wanted chaos in the industry. “They did not have the interests of the farmers at heart,” he said.

Others, however, support their opposition by stating that KCPTA as an institution has outlived its usefulness. A player claimed the article that sought to create the association was sneaked into the Act during the formulation of the law, when powerful coffee cartels ran the sector. “The powerful cartels at the time were opposed to liberalization of the industry,” said the source. He also said that farmers pay many levies to coffee bodies and the addition of a new unit “would eat further into their meager returns.” Farmers currently pay levies to the Coffee Board of Kenya, Coffee Research Foundation and other charges for milling, marketing and warehousing services, among others.

Cult Built Around Giant Teapot

Malaysia -- Malaysian authorities arrested 58 followers of a bizarre cult built around a giant teapot. According to a report by Reuters, cult leader, Ayah Pin, was not among those arrested and was believed to have gone into hiding after about 30-35 assailants armed with machetes and Molotov cocktails attacked the commune, burnt a car and the roof of a building, and scorched the giant teapot itself.

The sect, which believes the teapot has healing properties, is in Malaysia’s northeast, a devoutly Muslim area that has suddenly lost patience with the cult, headed by the man who says he is God and owner of everything.

State religious authorities have outlawed the teapot sect as a deviant cult. They face a fine of about $789, or two years in jail for flouting a ruling by authorities that Ayah Pin’s teachings and belief were false and had strayed from the true teachings of Islam.



Tea & Coffee - September/October, 2005
Tecpacking

ASIC 2014


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