Coffee-OPEC to buy Starbucks?

It’s a cliché, but oh-so-true: as we all try to make our way in these hard economic times, it’s those little luxuries that have to fall by the wayside. (And all on-line content has to start showing banners or Google-ads or start eking out revenue some other way . . . oh wait . . .) One of the most (in)famous of those “little luxuries” on the American scene over the past two decades has been Starbucks’ offerings of lattes, frappuccinos, and the like, and, accordingly, that flagship American coffee-chain has lately been taking it squarely on the chin in financial terms, and recently announced plans to close 600 of its shops in the US.

That fiscal trajectory, from top-of-the-mountain to down-in-the-dumps is all-too-familiar in these times – does it remind you, say, of Citibank? Perhaps it won’t be too much longer before even Starbucks will stand in need of an espresso-bailout.

That may very well be on the horizon, in fact, and this time from a private and foreign source, as we read on the on-line site of the German weekly Focus: Coffee-farmers want to buy Starbucks.

That would be an interesting move, what you could even call “reverse vertical integration” (“reverse” because such integration within an industry usually originates from the makers/sellers of the final product, who buy up their raw-materials providers at least partly in order to get an assured supply). It’s actually the National Federation of Colombian Coffee-Growers that is reported to be considering such a move; if you’ve never heard of them, then you might at least be aware of their fictional “Juan Valdez” character (together with his trusty burro Conchita), pictured here, from various advertisements.

All of this is reported on the Focus site out of the mouth of the Federación’s Director, Gabriel Silva, who estimates that only $200 million to $300 million should be enough to do the Starbucks takeover. (To be absolutely precise, Silva actually gave an interview to the Colombian newspaper El Tiempo – does not seem to be on-line – from which Focus based its reporting.) OK, maybe it is only that much money that the Federación itself needs to bring to the table, but you then have to ask yourself, since usually such moves are predicated upon heaps of supplementary borrowed money: Is Silva aware of the disastrous state of current credit conditions? Starbucks may not have found its “white knight” quite yet.

At least it’s pretty clear from the article that he is aware of coffee-demand conditions, i.e. what has gotten Starbucks in trouble in the first place. In that same interview to El Tiempo he announced that his Colombian Federación would be upping stockpiles of coffee beans by four times, in order to hold more supply off the market to try to counteract falling prices.

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