Foreign funds pour into coffee processing

The entry of a few major investors in instant coffee processing has stirred up this market segment in Viet Nam, the Dau Tu (Vietnam Investment Review) newspaper reports.

Early this month, an affiliate of the CCL Products Group, one of India’s leading coffee processors and exporters, Ngon Coffee Company Limited, started construction of its plant in Cu Kuin District in the Central Highland province of Dak Lak, the premier coffee growing region in the country.

It is the first foreign invested instant coffee processing project in the province.

Huynh Thi Chien Hoa, deputy director of Dak Lak Province’s Department of Planning and Investment, said Ngon Coffee Company Limited’s US$18 million project covered 24ha and would source all raw materials from the province.

The factory, which would churn out 10,000 tonnes of high-quality instant coffee per year, was expected to come online next July, she said.

The company’s general director Challa Srishant said the plant’s products would be locally consumed and exported.

It was projected that the plant would generate revenues of $27 million in the first year of operation and increase this to $40.5 million by 2014, Srishant said.

The Viet Nam Coffee and Cacao Association (Vicofa) quoted Alan Kaiser, director of the US National Coffee Association’s External Relations and Communications, as saying American coffee giants like Starbucks, Dunkin’ Donuts and Kraft Foods had shown keen interest in Vietnamese coffee during meetings with local exporters held this June in New York.

In April, Bloomberg News quoted Starbucks CEO Howard Schultz as saying the company expected to have “thousands of stores” in China and to enter Viet Nam and India in the coming time.

Starbucks reported $9.7 billion in 2009 sales.

Also in April, Singapore-based Olam International, a global supply chain player in agricultural products, opened its $50 million instant coffee processing plant in Long An Province’s Nhut Chanh Industrial Park after two years of construction.

The 5.3ha plant with 500 local workers is run by Olam’s subsidiary Cafe Outspan Viet Nam Company Limited.

Olam’s representative Raz Kuma said the plant would annually produce 4,000 tonnes, and double output by 2012 based on a further investment of $20 million.

Its products would be exported to Europe, Russia, Japan and the Middle East, he added.

Olam operates six coffee and spice processing factories in Viet Nam.

Viet Nam was the world’s largest producer of robusta coffee, the main ingredient for soluble coffee. Moreover, the Vietnamese Government allowed the import of coffee beans from other countries, Kuma added.

“The country is also the most cost-competitive producer,” he said.

In January, Japan-based Mizuho Corporate Bank signed an agreement to provide credit to Viet Nam’s leading coffee exporter, Vinacafe affiliate Tay Nguyen Coffee Import-Export and Investment Joint Stock Company, to help finance further expansion of its trademark in the Japanese market through Japanese importer Marubeni.

According to Vicofa, five of 10 biggest enterprises trading in coffee beans worldwide are now present in Viet Nam either independently or as joint ventures.

These enterprises are reported to purchase around 30 per cent of Viet Nam’s annual coffee production.- VietNamNet

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