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Tuesday, May 29, 2007
Special Reports

Made in Colombia: Coffee

Colombian coffee exports decline, but their value grow. New distribution channels are expected to help sales further.
PREMIUM AND FAMOUS: Colombian coffee fetches permium prices worldwide and are marketed using the famous Juan Valdez figure. (Photos: JuanValdez.com)

BY CHRONICLE STAFF

Colombia is not the world's largest coffee producer, having lost market share to Asian producers in recent years. But it still has a widespread reputation as having the world's best coffee. 

Coca-Cola certainly think so and recently announced a distribution agreement with the Colombian Coffee Federation. Coca-Cola will distribute Colombian coffee to its 425,000 restaurant clients in the United States. “It allows us to bring our customers a well known high-quality coffee brand in an operationally efficient format," Chris Lowe, president of Coca-Cola FoodService, said in a statement last week.

Meanwhile, the World Bank's International Finance Corporation has become a partner of the Juan Valdez stores that sell Colombian coffee. The IFC is investing $20 million to expand the chain, which currently consist of 65 stores in Colombia, Spain and the United States. The Juan Valdez figure has been used since 1959 to promote Colombian coffee and was invented by the U.S. advertising firm Doyle, Dane, Bernbach.

The two deals are welcome news to the Colombian coffee industry, which has struggled to boost exports in recent years amidst growing competition from low-cost producers like Vietnam. Last year, Colombia exported a total of 10.9 million 60-kilo bags of coffee, a mere 0.22 percent increase from 2005, according to the Colombian Coffee Federation. Thanks to a light increase in prices, the value of exports grew by 4.0 percent to $1.6 billion in the coffee season 2005/06.

The United States is the top market by far. Last year, Colombia exported 3.8 million 60-kilo bags to the U.S. market, a 0.78 percent decline from 2005.  It also saw a decline in Japan, its second-largest export market. The Asian country imported 1.5 million 60-kilo bags last year, a decline of 10.9 percent from 2005. The Colombians could take some comfort in a small  increase in exports to Germany, its third-largest export market, and a 20.2 percent increase to the UK. The UK is now the third-largest export market in the Europe for Colombian coffee, having replaced Italy last year. Its imports last year were also 65.8 percent higher than in 2004.

However, that increase was not enough to offset an ovreall decline in Europe last year, where key markets like Belgium and Italy bought less coffee from the the South American country.

Colombian coffee growers hope the expansion of the Juan Valdez chain will help. Plans call for opening up stores in Sweden and Russia as well as Latin American markets like Chile and Ecuador.



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