The CFC supports transparent coffee value chains
The Common Fund for Commodities (CFC) recently signed a new loan agreement to provide working capital financing to Coffee Planet, a full-service wholesale and direct-to-consumer coffee roasting company based in Dubai. Coffee Planet was established in 2005, and in 2008 opened a new UTZ, BRC, HACCP and ISO 22000 certified roaster with over 4,000 MT roasting capacity per annum. This enabled the company to become the largest specialty coffee roaster in the Middle East. As a certified roaster, its business model is focused on full traceability and control on its value chain. Coffee Planet seeks a working capital facility to support its growth strategy, which involves the increase of sustainable coffee bean sourcing from farmer groups, cooperatives and traders. The CFC has committed a loan facility of USD 2 million to finance the sourcing of coffee beans from producers; the transaction was supported by Blend Finance as adviser to Coffee Planet.
Following the Crop-to-Cup operational model, Coffee Planet has complete control of the supply chain, ensuring the highest quality standards for each stage. It sources high quality raw arabica green beans from farmer organizations and traders in Latin America, Africa, and Asia. The majority is sourced in Nicaragua, one of Latin America’s least developed countries. By purchasing coffee directly from coffee cooperatives for a fair price, Coffee Planet makes a difference for coffee farmers, stimulating local entrepreneurship.
The coffee is then roasted in the UAE, which significantly reduces the freight cost and keeps the coffee as fresh as possible, giving the company a competitive advantage. As such, the company is the only coffee supplier to provide a premium 360-degree solution to customers and consumers. It provides a wide range of B2B and B2C solutions, serving more than 800 local and international customers, operating over 5,000 coffee machines across the UAE, and has signed partnerships with several major blue-chip companies.
The last two years have been challenging for Coffee Planet due to COVID-19 related restrictions. The restrictions have affected business activities in the company’s key client segments, namely convenience stores, airport lounges, hotels, restaurants and catering, reducing the demand for coffee. That said, this context has also been an opportunity for the company to increase online sales and grow its third-party business by offering roasting solutions to other coffee brands.
Today Coffee Planet is on track to reach pre-COVID-19 levels of revenue and profitability. The company retained 99 percent of customers from the end of 2019 and grew its customer base by around 15 percent. This demonstrates the resilience of the business model, which is characterized by a diverse customer base and multiple sources of revenue.
The CFC loan to Coffee Planet is the first to an SME in the Middle East and shows the commitment of the CFC to support sustainable business models around the world. The CFC looks to support companies that provide integral solutions to the challenges of complex value chains by connecting smallholder farmers in an efficient, transparent and fair manner to final consumers. In fact, Coffee Planet has been fully UTZ-certified for the last ten years. As the first coffee roaster with such a certification in the Middle East and the only one in the UAE, Coffee Planet is instrumental in connecting certified coffee producers to coffee consumers in the Middle East.
Commenting on the benefits of certification, the Business Development Director of Coffee Planet, Jamie Brown said: “When we were awarded the UTZ certification it was a great achievement for us and a program which we are still very proud to support. Coffee Planet strives for the best quality coffee which requires us to be as ethical as possible by buying direct and supporting our coffee-producing partners all around the world through sustainable practices, implemented by the UTZ program and other initiatives we work with. By supporting individual farmers and their families, UTZ goes quite a few steps further in ensuring companies are operating fairly, resulting in the very best coffee for all.”
Ambassador Sheikh Mohammed Belal, Managing Director of the CFC, shared: “At the CFC we constantly seek to make value chains more transparent and fairer for all stakeholders – from the smallholder farmer harvesting the coffee beans to the customer consuming the beverage. We are happy to work with Coffee Planet, whose range of certifications reflects the importance of sustainable practices for high-quality products, which can both help more smallholders thrive and promote sustainable products among the end consumers”.
The CFC supports Coffee Planet's objective of greater transparency when it comes to its supply chain, and thus can serve as an example for other roasters. The CFC financing gives Coffee Planet additional working capital to increase sustainable coffee bean sourcing from farmer groups and cooperatives. The number of sustainable suppliers is expected to increase from 900 to 3,000 farmers. Moreover, the volume of beans from sustainable sources is expected to increase from 600 metric tons to 2,000 metric tons.
CFC is pleased to invest in a fully traceable coffee value chain with such diverse customer base and multiple sources of revenue. The Coffee Planet’s drive for a resilient business model is worth supporting as, in addition to traceable value chain, this partnership will bring more income for the smallholders in the developing world who are producing coffee for them.
Note to the editor: The Common Fund for Commodities (CFC) is an international financial institution established under the framework of the United Nations. The CFC provides financing for projects in commodity dependent developing countries to address challenges they face in the commodity value chains.
For more information: www.common-fund.org