Sao Paulo, Dec 18 - Nespresso, the premium coffee division of Swiss foods giant Nestle , will acquire from Brazil 45 percent of the coffee that will go to its Swiss factory for roasting, the division's top executive said.
The purchase of the coffee, which will eventually be sold across the world in the firm's specialty boutiques, differentiates Nespresso from its competitors such as Starbucks , which only purchases a small portion of the beans that it sells worldwide from Brazil.
"Brazilian coffee fits very well with our business," Nespresso's chief executive Gerhard Berssenbrugge told journalists on Monday in Sao Paulo at the company's recently inaugurated cafe.
Nespresso expects to end 2006 with 79 coffee boutiques across the world, and plans to have 120 open by the end of 2007.
The world price of coffee has been firm in recent months with Brazil entering the downturn in its biennial arabica crop cycle. After Brazilian trees produce a bumper crop like last season's, they typically produce less the following season to recuperate.
Brazil is the world's largest producer and exporter of green coffee beans. It has traditionally been roasters' source of bulk coffee for blends. But in the past few years, its producers have been winning recognition for the quality of their upscale specialty arabica beans.
Berssendrugge said the company plans to double in size by 2010, when revenues will climb from the expected 1 billion Swiss francs ($816 million) of 2006 to 2 billion Swiss francs.
But the executive expects competition to increase.
"Many companies are entering this market, Kraft , Coca-Cola looks like it will enter, Procter & Gamble . As we have had considerable growth, others are watching the market," Nespresso's executive said.
The 450 square meter boutique, which is among Sao Paulo's most expensive commercial real estate, marks Nespresso's debut in Latin America. On Tuesday, Berssendrugge heads to Buenos Aires to open the second store in the region.
"We have a close relationship with the producers, we pay prices above those stipulated by the 'fair trade' system, and we will continue this direction to guarantee supply," Berssendrugge said.
On Nov. 30, Starbucks opened its first cafe in Brazil.
Nespresso, is selling an espresso for 4.50 reais ($2.10) and a cappuccino for 8 reais. Its espresso machines run from 850 reais to 1,780 reais.
Nespresso also buys coffee in Colombia, Guatemala, Costa Rica, Kenya and Ethiopia.