Jamaican Blue Mtn coffee 'rare and special' - Starbucks
Published:Wednesday | August 31, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Coffee retail chain Starbucks said its summer campaign for Jamaica Blue Mountain Coffee (JBM) attracted sophisticated coffee lovers into its stores.
The Fortune 500 company declined to reveal sales specifics but local regulator Coffee Industry Board confirmed that the "coffee has been sold off".
Starbucks purchased a record 110 barrels of JBM, or 60 per cent more than last year, in a deal slated to grow the exposure of the luxury bean now suffering a decline in global sales. Starbucks planned to widen the coffee's availability by increasing its distribution tenfold, from 50 to 500 premium stores.
"For a limited time this past summer, Starbucks was proud to offer Starbucks Reserve Jamaica Blue Mountain coffee at select Starbucks stores in the US," said Starbucks in response to Wednesday Business.
Starbucks added that it does "not disclose marketing/sales expectations by beverage category".
The company recorded second-quarter net income of US$261.6 million in April 2011, or 20.4 per cent higher than the same quarter last year, based on efficiency measures. At the same time, its total net revenues increased 10 per cent to US$2.8 billion.
Sophisticated market
Starbucks described the Jamaican coffee grown by small farmers in the Blue Mountains as exceptional.
"There are times when we encounter a coffee so rare and special we can only get a small quantity - Jamaica Blue Mountain is a prime example, and we were thrilled to bring our customers along on this journey of discovery through our Starbucks Reserve line of premium, single-origin coffees," Starbucks said. "We believe stores offering Starbucks Reserve coffees will become a destination for coffee lovers seeking the most sophisticated coffees available."
The Fortune 500 company was also vague on whether it eventually planned to enter Jamaica with its retail chain, saying: "We have no announcements to make at this time regarding opening stores in Jamaica."
The Blue Mountain coffee was shipped in April and would have arrived at Starbucks in May. It retailed at about US$5 (J$430) per cup, among the priciest in the world.
Locally owned Gold Cup Coffee Company won the contract to supply the chain with 110 barrels, or 7,700 kilogrammes. The coffee shipment valued at least J$20 million, based on Financial Gleaner estimates utilising the minimum price set by the regulator of some US$30 per kg.
'Pilot' purchase
The Starbucks deal builds on last year's 'pilot' purchase of 70 barrels from state-owned Wallenford Coffee Company, which quickly sold out.
"We have offered this coffee only a few times before in our history," said Starbucks on its website last year.
Jamaica tried for years to break into the US market in a substantial way but faced two hurdles: the majority of its coffee was committed to Japan; and the high cost of the coffee.
The global recession has reduced Japan's demand for local coffee, forcing Jamaican dealers to find new contracts.
Total coffee export sales dropped 37 per cent between April and January 2011 to US$16.8 million compared to year earlier levels, according to the latest Bank of Jamaica statistics. Despite the decline, coffee remains the island's second-largest crop earner of foreign exchange.
Wallenford, currently up for sale, is the largest licensed processor and exporter of coffee beans. The company is projecting improved financials this year at a J$1.5-million net loss from J$820 million in total income, according to the Jamaica Public Bodies report. It, however, made a net loss of J$163 million and J$466 million for fiscal years 2008-09 and 2009-10, respectively.
Starbucks recorded April 2011 second-quarter net income of US$261.6 million, or 20.4 per cent higher than the same quarter last year, based on efficiency measures. At the same time, its total net revenues increased 10 per cent to US$2.8 billion.