Dak Lak seeking the right blend

“The Indian-backed Ngon Coffee Company Limited’s $18 million project is expected to help the province lure more foreign coffee investors who have good processing technologies and stably ensure coffee farmers’ output,” said Huynh Thi Chien Hoa, vice director of Dak Lak Provincial Department of Planning and Investment.

As an affiliate of CCL Products Group, one of India’s leading coffee processors and exporters, Ngon Coffee Company started construction of its plant on September 3, 2010 in Cu-Kuin district in the Central Highlands, home to Vietnam’s best coffee areas. It is the first foreign invested instant coffee processing project in the province.

Licenced in early 2009, the European-technology facility covers 24 hectares and will source all of its raw materials in Vietnam. The facility, which will churn out 10,000 tonnes of high-quality instant coffee per year, is expected to  come online in July next year.

The company’s general director Challa Srishant said that the plant’s products would be locally consumed and exported.

The plant’s revenue would be $27 million for the first year of operation and $40.5 million by 2014. The plant would use over 200 local workers at the start and the figure would be multiplied during the following years, plus other thousands of seasonal local labourers, Challa said.

The Vietnam Coffee and Cacao Association (Vicofa) cited Alan Kaiser, director of the US National Coffee Association’s External Relations and Communications, as saying that global giant coffee processors such as Starbucks, Dunkin’ Donuts and Kraft Foods were showing big interest in Vietnamese coffee during their meetings in June, 2010 in New York with Vietnamese coffee exporters.

In April this year, Bloomberg cited Starbucks chief executive officer Howard Schultz as saying that Starbucks, which reported $9.7 billion in 2009 sales, planned to expand distribution in Vietnam in the near future.

Also in April, Singaporean-backed Olam International, a global supply chain player in agricultural products, opened its $50 million instant coffee processing plant in the southern Long An province’s Nhut Chanh Industrial Park after two years of construction.

The 5.3ha plant which employs 500 local workers, is run by Olam’s subsidiary Café Outspan Vietnam Company Limited.

Olam’s representative Raz Kuma told VIR that the plant was going smoothly and could annually produce 4,000 tonnes of products, which would be doubled by 2012. The products will be exported to Europe, Russia, Japan and the Middle East. At present Olam is operating six coffee and spice processing factories in Vietnam.

“Vietnam is the world’s largest producer of robusta coffee which is the main ingredient for soluble coffee. The country is also the most cost-competitive producer,” Kuma said. 

In January, 2010, Japan’s Mizuho Bank inked a contract to provide capital for Tay Nguyen Coffee Investment Import and Export Company, one of Vietnam’s  biggest coffee exporters so that the firm would export coffee to Japan through Marubeni, Japan’s biggest coffee importer.

Vicofa said that five of the world’s 10 biggest coffee traders had penetrated Vietnam’s coffee market in the forms of joint ventures or wholly foreign-invested companies. These global traders such as Dak Man Coffee Processing Export Joint Venture Company, the Netherland’s Nedcoffee and Olam, were reported to trade 30 per cent of Vietnam’s annual total coffee output.