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Singapore's Olam to invest 45 mln usd in Vietnam coffee facility

Olam International
October 9, 2007

Singapore -- Agricultural commodities supplier Olam International said Tuesday it is investing 45 million US dollars in a greenfield soluble coffee manufacturing facility in Vietnam.

Olam, which is the world's largest supplier of Robusta green coffee, said the facility will produce and supply bulk spray-dried coffee powder, freeze-dried coffee granules and coffee extracts to the unbranded and private coffee label segment.

The company will build the facility in two phases. It aims to have production capacity of 3,700 metric tonnes per annum by the first quarter of 2009, and then expand capacity to 6,500 metric tonnes by 2011.

"Our expansion into soluble coffee manufacturing is a one-step adjacency move into a higher value-added activity in the coffee supply chain, where there is a sharing of customers, costs and channels," Olam's managing director for coffee, Vivek Verma, said in a statement.

The company said the overall soluble coffee market has been growing at 4 percent per annum over the last five years and the size of the market is now worth 3.65 billion US dollars.

Olam expects the investment to be earnings accretive from 2011.

"EBITDA margins and net profit .... (from 2013 onwards) are expected to be around 29 percent and 5-6 million US dollars, respectively," it said.

(1 US dollar = 1.47 Singapore dollars)

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