Thursday 28 Mar 2024
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KUALA LUMPUR (April 26): Berjaya Food Bhd chief executive officer (CEO) Datuk Sydney Lawrance Quays has said its wholly-owned subsidiary Berjaya Starbucks Coffee Co Sdn Bhd, which runs Starbucks coffee outlets in Malaysia and Brunei, hopes to avoid passing higher coffee prices to consumers "at all cost", helped by Berjaya Starbucks' direct purchases of coffee beans from US-based franchisor Starbucks Coffee International Inc, which is understood to have a fixed-price agreement with coffee planters to mitigate any cost increase.

Quays said in an emailed reply to theedgemarkets.com's queries that Berjaya Starbucks has never had issues with its supply chain despite the Covid-19 outbreak, which began early 2020, as Berjaya Starbucks purchases its coffee beans directly from Starbucks Coffee International.

"They (Starbucks Coffee International) also have a warehouse in Southeast Asia, which is beneficial for us in terms of transport charges.

"We have been in this industry for almost 25 years now, and the fluctuation of commodity prices is something to be expected. At this time, we trust that Starbucks Coffee International will do their best to continue to secure the right prices. And as the brand continues to grow and expand across all markets, ultimately, the cost will leverage itself on the economy of scale.

"In terms of passing the cost on to our consumers: Not at this moment, and we hope to avoid that at all cost," he said.

According to Trading Economics' website, Arabica coffee futures were traded at about US$2.24 a pound on Tuesday (April 26, 2022) at the Inter Continental Exchange (ICE). "Coffee makes up only a small portion of the products in our store and is not a major contributor to the cost of our goods sold, so the impact will be minimal to the overall pricing for our beverages and our food," Quays said.

Over the last one year, prices of the commodity have risen to current levels from about US$1.43 a pound on April 27, 2021, according to Trading Economics.

"Arabica coffee futures on ICE were at US$2.20 per pound in mid-April [2022], the lowest in over two weeks, pressured by a strong [US] dollar and expectations of lower demand due to the war in Ukraine.

"Growth concerns in Eastern Europe hampered household spending projections, as Russia's invasion of Ukraine shows no sign of slowing and both economies deteriorate quickly.

"Together, Russia and Ukraine consumed around six billion bags of coffee per year before the war. On the other hand, concerns of tighter supply limited the losses, as low rainfall in the Brazilian region of Minas Gerais hampered production expectations," Trading Economics said.

According to Berjaya Food's latest 2021 annual report, which was filed with Bursa Malaysia on Oct 26, 2021, the first Starbucks retail store in Malaysia was opened at the Fahrenheit 88 shopping centre along Jalan Gading here on Dec 17, 1998.

Fahrenheit 88 was formerly known as KL Plaza.

As at June 30, 2021, Berjaya Starbucks had 327 stores across Malaysia, except in Perlis, according to Berjaya Food's annual report.

On March 2, 2022, Berjaya Starbucks announced in a statement the opening of its first store in Perlis to complete the company's presence in all states and federal territories across Malaysia.
 
Berjaya Starbucks said the outlet was located in Perlis' capital Kangar.

At Bursa on Tuesday (April 26, 2022), Berjaya Food's share price finished 11 sen or 2.92% higher at RM3.88, which brings the company's market capitalisation to about RM1.4 billion.

Berjaya Food has 360.76 million outstanding shares, according to its latest quarterly financial report.

Edited ByChong Jin Hun
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