News from Coffee Giants
“Investors can consider taking exposure in the Tata Coffee stock, which trades at about 18 times its 2005-06 earnings. The Eight O” Clock (EOC) acquisition, instant coffee expansion plans, and the turnaround of the recently acquired tea plantations augur well for the stock. The EOC acquisition provides Tata Coffee access to brands, while the Tata Tea distribution network provides its access to a wider geographical spread. The company is planning a rights offer of partly convertible debentures (PCD) to partly finance its EOC acquisition and other capacity expansion requirements. Tata Coffee derives a chunk of its revenue from coffee growing, processing and instant coffee manufacturing. Though the company has for long been susceptible to trends in coffee prices, the degree of this susceptibility is set to decrease with the company foraying into retailing and expanding its instant coffee operations. Though prices are likely to remain flat on the back of strong inventory levels in major consuming countries, earnings growth for Tata Coffee would flow from its instant coffee and retail business. The Seattle-based Starbucks wants to expand into Brazil, Egypt, Russia and India before the end of the year Coffee shop giant Starbucks plans to triple its number of outlets around the world to 40,000. It is an increase of 10,000 on its previous target, over three times the current number of 12,000 and means it will have a presence in 40 countries. The Seattle-based business wants to expand into Brazil, Egypt, Russia and India before the end of the year. Starbucks wants 50 per cent of the planned 40,000 shops to be outside the United States . It said of the 40,000 stores, 20,000 will be in the U.S., while the rest will be in other world cities. Its coffee shops are attracting more Hispanics, women and less affluent consumers in U.S. and it would now target China, India, Egypt, Brazil and Russia
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. Starbucks currently operates 12,000 stores, including 8,800 in the U.S. The company had said it had a 6 per cent increase in September sales at stores open at least 13 months. For the fiscal year 2006, ended 1 October, the company posted a 7 per cent increase in same-store sales, compared with 8 per cent and 11 per cent in 2005 and 2004, respectively. Starbucks has more than 400 stores in China and the company is upbeat about its prospects in that country. It will open stores in Brazil and Egypt by the year-end and by the end of 2007 in India and Russia. In the U.S., the company had introduced lunch items like salads and sandwiches and plans to offer breakfast now. There will be some 6,500 coffee shops, which will offer sandwiches.
Source: www.cofei.com
