Tata Coffee brews an export hub in Africa

Economic Times - June 9, 2007
Even as the Tata Group prepares its business strategy for Tata Tea post Glaceau stake sale and acquisition of Everest Mineral Water, the conglomerate is now actively finalising plans for its coffee business.
Tata Coffee, Asia's largest coffee plantation company and a unit of Tata Tea, plans to make Africa a hub for its coffee exports which will extend its current markets from Russia and the CIS, to Europe and China. The Rs78-crore Tata Coffee recently got approval from the government of Uganda to build a coffee processing plant. The company expects construction on the plant to start in six months, said managing director MH Ashraf.

"It will have a capacity of 3,600 tonne and will be mainly used to export to Europe and China," he said, adding that while China has always been viewed as a tea drinking nation, it is now one of the world's fastest coffee consuming markets. Uganda, Africa's second-largest coffee producer, now exports to China through the Crane brand.

With the Chinese coffee market growing 15 per cent annually, coffee producers across the world are making a beeline there, said Ashraf. The country expects to produce 2.6 million 60-kg bags of coffee in the 2006-07 crop year. Tata Coffee is scheduled to spend $20 million for building the coffee processing plant in the Jinja municipality of Uganda.

Ashraf said all land clearances have been obtained along with and tax sops by the Uganda government. Getting approval for building plants in Africa is usually delayed as local governments demand a share in the running of businesses. As Uganda is a least-developed country, coffee exports to the EU and China won't attract taxes and import duties, he said.