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MBCF going rogue in coffee bean market

Published:Friday | November 21, 2014 | 12:00 AM
Senator Norman Grant, chief executive officer of Mavis Bank Coffee Factory. - File

Avia Collinder, Business Reporter

UNDER ITS proprietary Jablum brand, Mavis Bank Coffee factory (MBCF) has introduced a blended product, as Blue Mountain coffee supplies contract and the price of the bean spikes at the farm gate.

The coffee company's CEO, Senator Norman Grant, has also declared that he plans to defy the existing supply rules for the bean, under which farmers are contracted to individual coffee estates. MBCF will buy the premium beans from anyone with capacity to sell, he said.

Blue Mountain coffee supplies have slid 24 per cent year-over-year. MBCF is now paying $7,200 per box for green bean, up from $5,000 in 2013 and $3,500 the year before, Grant told the Financial Gleaner.

Trying to grow company share in a market that is low on beans, Mavis Bank has added a new product, the Jablum Caribbean Blend made from 30 per cent Blue Mountain and 70 per cent Caribbean arabica coffees.

"We are introducing that product at a different price point so that customers in travel retail can still buy a 30 per cent Blue Mountain coffee ... because of the shortage, the volume," said the MBCF chief executive.

Grant said that in 2013 local production fell to two million pounds of coffee in Jamaica with only 1.6 million pounds of Blue Mountain. "This is an all-time low," he said.

MBCF is owned by Jamaica Producers Group and Pan-Jamaican Investment Trust, which acquired the operation in 2011. Then, the factory was processing 1.4 million pounds of green beans annually from cherry berries, representing approximately 30 per cent of Jamaica's Blue Mountain coffee output.

Grant declined comment on current output, saying only that buyers of its products are willing to take four times what is now available from the company.

To meet demand, he said MBCF will be purchasing beans from any farmer willing to sell, in defiance of the established registration system under which local farmers sell only to specific estates under contract.

"It's a competitive industry and whoever plants coffee and has coffee available for sale, Mavis Bank Coffee is open to have a relationship with them," said Grant.

"That's how the industry is structured and that's what our focus is at this time. You can quote me. I have no problem. We are in the business of buying coffee and we are prepared to provide them [farmers] with preferential services," he declared.

Mavis Bank's owners have now completed $250 million of upgrades primarily intended to improve product quality and market access. The spend included construction of a $100m waste treatment facility and extension of the barbecue for the drying of beans; $100m for new bean roasting equipment; a new accounting platform which supports the capture of farmers' data; and $20 million on quality systems to achieve certification from the US Food and Drug Administration, Grant said.

He said MBCF is the first coffee operation in Jamaica to have received such a certification and is now preparing for HACCP certification within the next three months.

MBCF operates as a coffee dealer and processor in the business of green bean processing, roasting, and coffee drink production.

It is the registered owner of the Jablum trademark, and its products are offered for sale in Japan, China, South Korea, the United States, the United Kingdom, and the Caribbean.

Some 70 per cent of green bean is currently sold to Japan, 20 per cent to the US and the remainder to Europe.

Revenue is now split between green beans and roast in a 65:35 ratio, but Grant said that a push is being made to improve the proportion of sales from value added products over time. He said the company's sales revenue has been steady since the change of ownership.

MBCF will be deepening its distribution channels - targeting hotels, supermarkets, travel retail and Caribbean distribution - "to really intensify our presence in Jamaica and all coffee segments" and to ensure that "roasted is in travel retail, cruise ships," he said.

"We are going to Caribbean and USA; we are placing our coffee all over the world. It's an intensification," he added.