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Olam’s MD on controlling the coffee chain

From the May 2012 issue.

In just a decade and a half, Olam’s coffee division has grown to be one of the largest in the world. Olam's Managing Director Vivek Verma tells GCR how the company is expanding its umbrella to gain greater control over the supply chain.

olamOne thousand, three hundred cups of coffee a second. As consumption figures reach record highs, this amount of coffee is an astounding volume to take in. Even more impressive is that this isn’t the world consumption figure – it’s Olam’s coffee division’s trade figures.

Based in Singapore, Olam has grown at record levels since their start in coffee 15 years ago. In the last few years, those figures have skyrocketed, with an average year-on-year growth level of around 20 per cent. Today, the division is one of the largest coffee traders in the world. From Olam’s start in West Africa and India, the company that based its roots in Robusta trade moved into Arabica in South and Central America in the last five years.

Olam’s Managing Director and Global Head of its Coffee division, Vivek Verma tells GCR that in 2012 the company expects to trade over 9 million bags. With global production expected at around 137 million bags, that equates to a 6 per cent share of the global coffee market.

“We are always looking at creating value, and one of the pathways to creating value is to grow the business and to continue to grow the business over as long a period as possible– but only as long as the growth is profitable and generates a spread over cost of capital,” says Verma from the company’s headquarters in Singapore.

Verma says he expects the coffee business to continue to achieve a 20 per cent growth rate over the next few years. He’s cautious, however, when talking about these levels of growth.

“While we continuously look for opportunities to grow, we’re also very conscious that it’s easy to buy growth in this market, and that’s something we very clearly don’t want to do,” he says. “We focus on building up on our core competencies, on expanding our origination networks, on continuing to do the things that we are doing well.”

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