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Coffee and Tea Reports from the Front Lines

Cara Wins Battle for Second Cup

CANADA - Cara Operations Ltd. has finally won the battle for Second Cup Ltd., reported the Globe and Mail recently.

Michael Bregman signed away the coffee chain his family built after hours of negotiation with the foodservice company’s president Gabe Tsampalieros. Bregman will pocket $18 million for his stake in Second Cup.

To swing the deal, Tsampalieros had to raise Cara’s offer twice, from $7 to $7.50 and then to $8 a share. Cara also had to extend the offer to 100% of the shares outstanding from the original 71%

“We accepted the new offer [of $8 a share],” said Bregman, who held out for a higher price. “It is fair to shareholders. It is a fair deal for everybody.”

Second Cup “will do well under Cara,” he added. “It is a good aquisition for them.”

Toronto-based Cara, already the single biggest shareholder with 43%, will end up paying $42.4 million, which is $5.3 million more than planned, to increase its stake to 100%.

Cara plans to build Second Cup the same way it expanded Cara’s other restaurant acquisitions (Swiss Chalet, Harvey’s, Montana’s and Kelsey’s ), and it hospital, airline catering and food distribution businesses.

India to Promote Organic Tea
INDIA - In response to a steep decline in export of tea this past financial year, the commerce ministry of India has launched a $1.4 million project for promotion of organic tea, reports the Economic Times.

As compared to $803million during April-August ‘00, tea exports during the corresponding period of ‘01 was $696m. The fall in business is attributed to strong competition from Sri Lanka, Kenya, China, Indonesia and Vietnam.

Various measures will be taken including promotion of organic tea, senior officials in the commerce department said.

The industry feels organic tea would benefit from promotion of green teas as a health drink, especially in the health-conscious western countries. Hence the project which is to obtain financial assistance from the Common Fund for Commodities (CFC), an international organization associated with the Food and Agricultural Organization (FAO).

The Indian Tea Board and the tea industry will contribute to the promotion project while CFC is expected to provide a grant of $0.9m and loans totaling 40.3m. The project will aim at establishment of modern organic farms and lay down international standards for organic tea. Then a certification process would be established to assist exports.

Export of tea here has declined since Russia has increased its import duty on the commodity - and Iran has stopped importing tea altogether. In fact, imports have declined in almost all markets including the U.K., Canada, UAE, Poland, Iraq, Libya, Turkey, Japan and Australia, sources said.

McDonald’s Helps Out Guatemalan Coffee
GUATEMALA - In order to encourage domestic consumption of coffee, McDonald´s Guatemala is now offering their consumers Guatemalan coffee-based products.

As a result of the Internal Consumption Program of Anacafé and a media campaign promoting the Seal of Purity, McDonald´s Guatemala decided to establish a promotion agreement with Anacafé, who authorized the firm to use the same slogans of the national campaign and the purity seal in all their promotional material. The seal is also printed on all carton cups that will be used for the rest of the year. Customers of the fast food chain can buy a Mocca Shake, a Sundae with coffee topping, a Cappuccino McFlurry or get a meal deal so that when they purchase a double hamburger, they get a regular coffee at 50% off. McDonald´s currently buys Café Moro, a brand offered by the Guatemalan roaster Buen Café.

Under the slogan “McDonald´s supporting Guatemalan Coffee...proudly ours” 37 stores (including main cities in the rural area such as Quetzaltenango, Bárcenas, Escuintla and Mazatenango) offer the same coffee menu to over 3 million Guatemalans during the month of January. All these stores are also decorated with coffee-related items.

Tea & Coffee - February/March 2002
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