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Starbucks to sell home-grown coffee to the Colombians

The Starbucks logo hangs on a window inside a newly designed Starbucks coffee shop in Fountain Valley, California August 22, 2013. REUTERS/M
The Starbucks logo hangs on a window inside a newly designed Starbucks coffee shop in Fountain Valley, California August 22, 2013. REUTERS/M

By Atossa Araxia Abrahamian

NEW YORK (Reuters) - Starbucks Coffee Company, which has exported coffee beans from Colombia for more than four decades, plans to open its first café in the Andean country in 2014 and serve only locally-grown coffee.

The world's biggest coffee chain hopes to open at least 50 coffee shops in cities across Colombia in the next five years, starting in the capital Bogota.

The announcement by the Seattle based-firm coincided with protests by local coffee growers who are demanding the government provide more aid to counter low global prices and cheap imports hitting the world's biggest producer of washed arabica beans.

"We've had great success in Latin American and it's well overdue for us to open up in Colombia," Starbucks Chief Executive Howard Schultz told Reuters in an interview, adding that he hoped to open at least six stores in the first year.

A military crackdown on drug-funded insurgent groups has made Colombia more attractive to foreign firms once fearful of investing in the nation when the conflict between Marxist FARC rebels and the government was at its height.

In addition to opening stores, Starbucks said it would partner with the United States Agency for International Development (USAID) and invest a joint $3 million in a plan to help 25,000 farmers in conflict-hit areas of Colombia increase coffee yields.

Starbucks' new coffee shops will be run by a joint venture between Mexican restaurant firm Alsea, which operates more than 500 Starbucks stores in Latin America, and Colcafe, a subsidiary of Grupo Nutresa, the fourth-largest Colombian food company.

Colcafe helped Starbucks develop Via, its instant coffee product, launched in 2008. The Via manufacturing business, Starbucks' only roasting facility in Colombia, will be expanded to roast espresso blends and packaged coffee for sale in the country.

"We want to sell Colombian coffee in Colombia," said Craig Russell, Starbucks' senior vice president of global coffee.

The USAID-Starbucks program will be directed at farmers in Antioquia, Tolima, Huila and Cauca, rich coffee-growing areas where there is still a FARC presence.

A major aim of the initiative is to reduce "extreme poverty, which is still a reality for almost all of these small-scale coffee growers that have barely one hectare (2.5 acres) of land," said USAID chief Raj Shah.

Carlos Piedrahita, head of Nutresa, said Starbucks' entrance into Colombia's coffee shop market would mean investment and jobs.

"This means more demand for our national produce," said Piedrahita, speaking at a press conference in Bogota alongside Schultz.

Starbucks said its research suggests the cost of the chain's beverages, known for being relatively expensive around the world, won't deter consumers. The company declined to reveal its Colombia pricing, citing competitiveness.

Schultz said Starbucks would not undercut the country's farmer-owned Juan Valdez chain and probably charge a little more to create Starbucks "home-from-home" lounge environment. He emphasized the company wanted to make a "respectful" entry into a country that has been a key coffee supplier for many years.

(Additional reporting by Lesley Wroughton in Washington DC and Peter Murphy in Bogota; editing by Andrew Hay)

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