Tata Coffee expects output to rise by 12%

Tata Coffee expects about 12 per cent higher production this coffee season (October 2007-September 2008) at over 8,500 tonnes.

The Bangalore-based company had clocked 7,517 tonnes (Arabica 2,014 and Robusta 5,503 tonnes) and instant coffee production of 3,628 tonnes last season.

Declining to reveal the exact production numbers, M H Ashraff, managing director, Tata Coffee, said, "We are expecting higher coffee crop output this season. The crop is shaping up well despite heavy rains. Last year was an 'off year' for us, particularly in Arabica."

He said the company does not foresee prices moving up from the present band. According to industry experts, Brazil is expecting a bumper crop next year which may depress prices in the coming season.

The commissioning of the freeze-dried plant in Theni, Tamil Nadu, is expected to provide a fillip to the company's overall margins in the instant coffee business this year as consumers are increasingly migrating from roasted and ground (R&G) coffee on account of its inherent convenience.

"There are considerable opportunities available in the instant coffee segment. Growth potential is clearly laid out in supplies to coffee shops, hotels, airlines and defence establishments. In vending, growth in the premix-based business is expected to plateau, while rapid growth is anticipated in bean-based vending," said Ashraff.

Tata Coffee exported 4,619 tonnes in 2006-07 as against 2,800 tonnes. The company has been focussing on fast growing markets like central and eastern Europe, and Asia as they collectively consume about 79,000 tonnes annually.

"The formation of Alliance Coffee, the company's new marketing arm, is likely to lead to new customer acquisitions and sales diversification.

Instant coffee will, however, remain under pressure due to dollar depreciation, which is affecting export-oriented businesses," said Ashraff.

The company also proposes to set up a soluble coffee plant in Uganda under its joint venture company, Tata Coffee (Uganda). With Africa being a large coffee producer, the venture would be able to source coffee at competitive prices, he added.