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Cashing in on coffee

Thursday, July 21, 2011

The coffee business is trending upward in Central America, in terms of both production and consumption.

As far as production is concerned, coffee prices have more than doubled during the past 12 months, and this time they appear poised to stay high for several years, if not longer, creating opportunities for growers.

Excessive rainfall has cut Colombian production of high-quality arabica beans, driving up prices. More important is a strong trend toward increased coffee consumption worldwide, as tea-drinkers switch to coffee. In major British cities, there is now a Starbucks or a Costa’s on every other corner. In Russia likewise it’s fashionable to go to a “Kofe Xaus”. Then there is China, where Starbucks already has 450 outlets, and aims to triple that number by 2015.

Meanwhile, Central America is transforming itself into a region which not only producers top-quality coffee, but also consumes it, with substantial growth in franchising operations. Starbucks and McCafé now face strong competition from regional chains that include Guatemala’s Café Barista and Espresso Americano of Honduras.

Barista has already moved into El Salvador and has plans to expand in Costa Rica, while Espresso Americano has 120 shops in its home country, Nicaragua and Costa Rica. Panama’s Café Durán was acquired last month recently by Casa Luker of Colombia for a price close to $75 million, according to Colombian sources.