Mavis Bank coffee sales drop 30% - But commitments kept, says CEO
Published:Friday | November 5, 2010 | 12:00 AM
Avia Collinder, Business Writer
After turning in a record sales performance last year, highland coffee company Mavis Bank Central Factory Limited (MBCF), which produces the Jablum-branded coffee, is seeing a fall-off in sales this year.
Provisional figures show a decline of approximately 30 per cent for the period August 2009 to July 2010, from J$1 billion to J$700 million.
Last year's sales included a record turnover of US$3 million in Mavis Bank's United States market, according to its managing director, Senator Norman Grant, which accounted for 20 per cent of overall sales.
Grant said the company, in which the Development Bank of Jamaica (DBJ) and the Munn family are shareholders, has been affected by the softening of Japanese demand for coffee.
Amid the sales fall-off, however, the firm continues to benefit significantly, according to Grant from a green bean agency agreement it had signed with the Munn family-controlled Blue Mountain Coffee Inc (BMCI).
"The BMCI agreement was signed over 10 years ago as a part of the strategy to develop the USA market," said Grant.
"The company, since 1997, embarked on an aggressive strategy to diversify the Jamaica Blue Mountain coffee market in order to maintain viability and a competitive advantage outside of Japan in any given crop year," he said.
BMCI, established in 1990 and located in Gainesville, Georgia, in the US, is involved in marketing, distribution and roasting of the coffee. It is run by Edgar Munn, the nephew of Keble Munn, a former government minister of the 1970s and pioneer and principal of the Munn family's coffee interests.
Edgar Munn trades as the Mavis Bank's representative for North America and is said to be primarily responsible for MBCF's market penetration there.
Munn, Grant said, has been able to capitalise on his strong relationships with a number of North American coffee houses and roasters for the benefit of both the buyers and MBCF. He said BMCI has expanded the green bean, roasted and ground products market in the US.
Edgar Munn was also licensed to do his own roasting in the US and produces under the Jablum label.
As MBCF tries to revive sales, it is introducing, along with BMCI, new product sizes in the US market. It has also launched a new product, Jamaica Mountain Pea Berry Espresso, which is being sold on the Internet.
These initiatives, part of a market diversification strategy crafted by the company during the last decade, has rescued revenues.
Grant pointed out that in spite of lower sales for 2010, MBCF is able to honour its financial obligations.
"All final payments to the 6,000 Blue Mountain coffee farmers in Portland, St Andrew and St Thomas supplying coffee to the factory for the crop year 2009-2010" have been made, he said.
The payment to the farmers was J$3,200 gross per box, resulting in a total pay-out to them of more than J$330 million, the MBCF boss said.
Grant said his company controls more than 42 per cent of the market for the premium brand, Blue Mountain coffee, purchasing over 100,000 boxes of the 270,000 boxes of Jamaica Blue Mountain produced for crop year 2009-10.
Falling sales for the current crop are being blamed on Japanese buyers whose purchases have dropped from approximately 1,000 metric tons to 550 metric tons in 2009-10.
Both companies have been able to keep sales brisk by landing business from large coffee houses and warehousing its coffee in Atlanta, where, Grant said, the response time is more efficient than if the process started in Jamaica.
Last year's record sales and strong revenues were due largely to these steps. The performance in 2009 represented a turnaround from 1997, when 99 per cent of export sales was to the Japanese market, with only one per cent to the USA.
To revive flagging sales for the crop, which is yet to be completely sold off, MBCF has been working with BMCI on introducing smaller barrel sizes.
"We will be targeting the mini roasters as a means of increasing demand," Grant said.
"The MBCF coffee will be available in 30kg, 15kg and 8kg barrels, in addition to the 70kg which is now offered," he said.
"We expect that this will be a very big seller."