Starbucks to expand African coffee purchases

By Sybille de La Hamaide

PARIS (Reuters) – U.S. coffee giant Starbucks (SBUX.O: Quote, Profile, Research) is increasingly turning to Africa for its coffee as it seeks to build on its traditional suppliers, the company’s European-based head of global purchasing said on Wednesday.

Starbucks bought around 312 million pounds (142 million kg) of coffee in 28 countries in 2005, of which 80 percent came from Latin America, 15 percent from Asia and just five percent from Africa.

But African coffee increasingly will be sold in future in the nearly 11,000 Starbucks shops around the world as the company seeks more coffee and diversifies its supplies.

“Today the biggest growth in purchases will take place in Africa,” Alain Poncelet, the Lausanne-based managing director of Starbucks Coffee Trading Company told Reuters in an interview.

“But purchases in other regions will not be cut,” he added.

Starbucks’ African coffees, which he says have distinctive floral aromas and citrusy tastes, are mainly produced in Kenya and Ethiopia, but other suppliers such as Rwanda and Burundi are emerging as they raise quality standards, Poncelet said.

One of the main quality issues in Africa is to increase the use of washing to separate the coffee beans from the cherries, which are the fruit of the coffee plant. Due to lack of water, most African farmers use a dry method, he said.

KEY TRANSPARENCY

But the main condition for the Seattle-based latte giant to sharply increase its African coffee supplies will be a rise in economic transparency, Poncelet said.

Starbucks, the leading retailer of specialty coffee in the world, buys more than two percent of the world’s coffee output. All of these purchases are made through forward supply contracts, bypassing the international coffee futures market.

In 2005, 93 percent of these contracts had so-called transparency clauses to ensure the premium Starbucks pays is passed on producers

But in some African countries, notably Ethiopia and Kenya, coffee is sold through government auctions, which make transparency down to producer level impossible, Poncelet said.

“The key factor in Africa will be transparency, mainly in Kenya,” he said, although he added that the situation in Ethiopia was improving.

Poncelet who joined Starbucks in 2003 after having worked 10 years as a coffee exporter in Mexico, also said Africa produces relatively little arabica coffee, the variety Starbucks buys.

Starbucks aims to have 30,000 stores, with half of these in the United States and the remainder elsewhere.

The company launched its first store in France two years ago. It has since opened 22 others, all located in Paris or its suburbs. Two more are being built and another two are planned, Stephane Klein, head of Starbucks France told a news conference.