Estate Coffee Holdings (OTCBB: ECHD) has developed a unique business model that brings added value to all stakeholders in the supply chain - a true tree to cup model with ownership and participation at all stages of coffee production. ECHD's business model can be duplicated in any country where these fine coffees are grown, creating a socially responsible and viable coffee company. ECHD recently acquired a 20% interest in a coffee roasting operation in China.
Estate Coffee Holdings mission is to become a significant participant in the global coffee industry. The business model and strategy is to take an ownership role in all aspects of bringing coffee to market, thereby capturing margins at each step from; coffee production and purchasing; processing; exporting; roasting and; direct consumer sales.
The vision of Estate Coffee Holdings is to create a positive social impact in the coffee industry. Estate Coffee Holdings has plans for growth in various coffee producing countries by having an active ownership role through acquisitions and joint ventures at all stages from tree to cup. The business model allows itself to be duplicated in any country where these fine coffees are grown, creating a socially responsible and viable coffee company.
The first entry into this market has been the successful acquisition of a 20% interest in a coffee roasting operation in China. Though traditionally tea drinkers, the Chinese are quickly adopting the same thirst for fine Arabica coffee as experienced in Western culture. Many new shops have sprung up in China in recent years, servicing the changing tastes of China’s 1.3 billion population. It is for this reason that Estate Coffee Holdings has entered this market to capitalize on the limited market saturation when compared to North America and other Western markets.
Further J/V’s and acquisitions are in discussion for roasters, farms, and processors. These will become public very soon.
Profit margins and diversification
The business model is unique, in that the company plans to become a stakeholder in each phase of bringing coffee to the global marketplace. Profit margins and diversification are the key reasons behind this strategy as typically these coffees carry the highest premium price because there is limited supply and huge demand.
For example, green bean coffee sold on commodities exchange can range from $1.10 to $1.85 per pound. Once roasted and packaged, this coffee hits the retail market ranging from $7.00 to $14.00 per pound. This is for your daily, average variety type of coffee.
The gourmet and specialty coffees sell for much higher premiums. Go into your favorite supermarket right now and check out their gourmet coffees. You will see varietals from Guatemala, Costa Rica and other countries offered at $6.99 and $7.99 per 100 grams. That equates to over $30.00 per pound roasted! In being a strategic partner with the landowners, ECHD can source these coffees for less than $3.00 per lb, making exceptional margins at each step in the distribution chain. That is:
as a producer of coffee beans
as a purchaser of fine coffees direct from farmers
as a processor
as an exporter to wholesale and retail customers
as a roaster for value added
as a retailer to consumers
ECHD is eliminating all middlemen and capitalizing on margins of 40 to 100%
at each stage of bringing coffee to market.
This business model can be initiated in every coffee producing country in the world such as Columbia, Guatemala, Costa Rica, Jamaica, Indonesia, Papua New Guinea and Panama to name a few. By targeting these high profile, high demand coffees, it is expected the company will also gain a high profile in the business and investment communities.
