Roasted Coffee Makers Such As Leo Coffee, Coorg Coffee Supplies Feel Pinch Of Heavy Exports.

KOCHI: Roasted coffee makers are feeling the pinch of heavy exports which have almost exhausted the coffee stock in the country. Many roasters in south India are on the brink of closure unable to cope with the pressure on margins. Exports peaked to a new high last year and the buoyant trend continued in the first quarter of the current year.

This has left roasted coffee markers, who cater to the domestic market particularly in South India, with no option but to raise the prices of their products. Roasted coffee now sells at around Rs 400 per kg, up from Rs 250 per kg a few months ago.

"We can't raise the prices beyond a point as such a move would affect the sales. So most of us are operating on very thin margins," said BS Suryaprakash, chief executive of Coorg Coffee Supplies. Raw coffee prices hover around Rs 250 per kg, which after adding tax and transportation cost becomes Rs 300 on reaching Bangalore. Roasting gives 80% yield per kg of raw coffee. Leo Coffee, a leading brand in Tamil Nadu, recently raised the prices.

"We increased the price by Rs 10 to Rs 370 per kg. To keep up the sales we are exploring new markets and are introducing innovative products such as instant retail coffee targetted at youth," said Muthuramalingam, area sales manager of the company.Normally 70% of the production, which has been pegged at 3.02 lakh tones for 2010-11 by Coffee Board, is exported.

But this time, over 80% has been exported. Since the roasted coffee sector doesn't have any tax benefits, several small companies are on the verge of folding up because of high input prices. "There are thousands of companies selling coffee in the domestic market. Some may even switch to selling alternative products to survive in the market," Suryaprakash said.

But the deficit is likely to continue till the arrival of next coffee crop by November. "The first six months of 2011 have been exceptionally good for the exports. Normally, the country will have stock from previous 2 to 3 years. But as prices were good, even that was exported," Coffee Board chairman Jawaid Akthar said.

Source : economictimes.indiatimes.com