Starbucks to Challenge Juan Valdez, Says Colombia Coffee Group

Bloomberg – The arrival of Starbucks Corp.  in Colombia next year will boost coffee bean sales to the U.S. company and help improve the home-grown Juan Valdez cafe chain, says Colombia’s coffee federation.

starbucks_coffeeThe federation is the largest shareholder in Colombia’s Juan Valdez, founded 10 years ago and now with 170 branches in Colombia and 63 abroad. Starbucks’ entry is a “challenge” that will generate improvements in the management of Juan Valdez, said Luis Munoz, the federation’s head.

“We think there is a large opportunity for growth in Colombia,” Munoz said in an interview from his Bogota office yesterday. “The arrival of Starbucks, rather than changing the Valdez growth plan, clearly implies greater attention to location, service and product innovation.”

Last month Starbucks said it plans to open its first stores in the Andean nation in 2014, selling only Colombian coffee. The Seattle-based company buys about 500,000 60-kilogram bags of Colombia’s prized mild arabica coffee each year.

“We have discussed much higher growth targets,” Munoz said. “Next year we will already have sales growth of 10 to 15 percent to the company, and in the medium term arrive at 1 million bags per year.”

Marketing Colombia

Munoz met with Starbucks Chief Executive Officer and founder Howard Schultz when he visited Colombia last month, with the two sides currently working on an agreement to help market Colombian coffee in Starbucks chains around the world. The federation promotes the interests of Colombian coffee producers.

“We want to build the map of Colombia within the Starbucks market,” said Munoz, who hopes the accord will be signed this year. “Not only from a regional supply perspective, but also highlighting sustainable, environmentally friendly and organic coffees.”

Colombian coffee output this year is set to beat previous estimates and potentially reach 10.5 million bags, increasing further in 2014, Munoz said.

“Starbucks’ entry generates challenges,” Munoz said. “They have, like many big chains, many competitive advantages.”

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