Hamburg, April 23 - Germany's largest coffee roaster Tchibo posted on Wednesday a fall in 2007 sales, but said it plans expansion in east Europe and coffee drinks.
Tchibo's 2007 sales fell by seven percent on the year to 3.559 billion euros. Earnings before interest and tax (EBIT) fell 38 percent to 110 million euros.
The fall was partly due to the company's withdrawal from the French and Dutch markets but German retail sales were also slow.
Tchibo expected a fall in 2008 turnover, partly because of restructuring, Finance director Yves Mueller said at a news conference.
The company plans to open over 400 coffee shops in east Europe with countries earmarked for expansion including Russia, Ukraine and Romania, Mueller said.
Tchibo's east European sales increased by around 30 percent in 2007, with strong performances achieved in countries including Poland and the Czech Republic.
It currently has 80 east European coffee shops including in Turkey.
Tchibo maintained its leadership in Germany's roast coffee market in 2007, said Mueller. It concentrated on higher quality coffee and was able to achieve higher prices than rivals while holding sales volumes, he said.
Coffee traders have said Tchibo is facing intense competition from discount supermarket chains which use coffee as a loss-leader to tempt people into their shops.
Coffee now contributes a minority of Tchibo group's sales, although the privately-owned company does not release financial details of its coffee business.
It uses its coffee shops to sell a huge range of consumer goods ranging from clothes to electronics and even pension plans with the goods on offer changing weekly.
It has suffered because discount supermarkets have also copied this concept of a weekly-changing non-food offer. "Tchibo has been copied without mercy by other retailers in past years," said Arno Mahlert, CEO of Tchibo's parent, German private holding company Maxinvest.
Earlier this year Tchibo announced it was restructuring its German coffee shop chain by closing smaller outlets.
The company said then it was scaling back plans to expand in west European countries including Britain and would instead focus on east Europe.
Coffee was still seen as the core business sector despite the large non-food sales, said Mueller.
"We want to massively expand massively in the sectors espresso and cream coffee drinks," said Mueller, when asked about 2008 strategy. Tchibo currently held about 15 percent of Germany's Espresso market but wanted major growth.
Mahlert said he expected "a generally rising trend" in German coffee retail prices but said he could not give a forecast in view of volatile international coffee prices.
"Germany's coffee market has the hardest competition in the world," he said.
Tchibo had also increased the volume of coffee it sells which has been produced with sustainable agriculture.
Some two percent of Tchibo's 2007 coffee sales by volume were of sustainable coffee and it was planned to raise this in the short term to six to seven percent, Mahlert said.