Bogota, May 29 - The Colombian Juan Valdez coffee shop chain has signed a distribution deal with the Coca-Cola Food Service to sell Colombian coffee in vending machines at 11,000 locations in the U.S., Colombia's National Federation Of Coffee Growers, or Fedecafe, said.
The deal was signed between Coca-Cola's (KO) food service division, which distributes products at 455,000 restaurants across the U.S., and Procafecol, the Colombian company that owns the Juan Valdez brand and operates coffee shops.
Procafecol is a holding company set up to manage the coffee shops and the Juan Valdez brand as a fully-owned subsidy of Colombia's Fedecafe, but earlier this year Fedecafe sold 15.75% of the shares to 22,500 small growers.
"This alliance will raise the standards of living of our coffee farmers and enhance the reputation and recognition of Juan Valdez," said Fedecafe General Manager Gabriel Silva in a report, a copy of which was seen by Dow Jones Newswires Tuesday.
Silva hailed the agreement as a "business model that clearly supports the development of vulnerable communities in the world" by improving the options for poor small-holder producers to create value-added earning possibilities.
The coffee is to be sold via vending machines, using a stabilized coffee extract that doesn't require refrigeration, Silva said.
Two liters of the extract produce 430 seven-ounce cups of coffee and it is estimated that between 27,000 and 45,000 bags of 60 kilograms of green coffee will be required to serve the initial 11,000 machines per year, Fedecafe said.
"This is a great partnership for both Coca-Cola Food Services and the National Federation of Coffee Growers," said Chris Lowe, president of Coca-Cola Food Services, in the report.
"It allows us to bring our customers a well-known high-quality coffee brand in an operationally efficient format and provided the Federation with the opportunity to create new Juan Valdez fans among the customers of the restaurants who carry Coca-Cola brands," said Lowe.
Silva said there was "great potential" for growth, given that the Coca-Cola Food Service serves 425,000 across the U.S. and if the deal expands to cover 200,000 vending points total coffee demand would reach 500,000 bags.
"The deal will generate millions of dollars for the National Coffee Fund," said Silva.
Fedecafe opened its first Juan Valdez coffee shop in the Colombian capital in 2002, and its first shop abroad in the U.S. in 2004 and currently has 70 stores including 60 in Colombia, eight in the U.S. and two in Madrid.