Issue link: https://read.dmtmag.com/i/491368
10 STiR tea & coffee industry international Cover: Silo Coffee in Berlin, Germany. Tim Hortons Merger Tim Hortons agreed to an $US11 billion merger with Burger King Worldwide in late August that will create the world's third largest quick serve restaurant company. "One of the key value drivers of this transaction is the potential to significantly accelerate Tim Hortons' international growth potential, like we did with Burger King," said Alex Behring, executive chairman of Burger King and managing partner at 3G Capital. His Brazil-based private equity firm will own 51% of the combined venture that will be headquartered in Canada. The deal was an "inversion" for tax benefits and greater ease in re-patrioting overseas earnings. Burger King operations will remain in Miami, Fla. Behring will serve as executive chairman and director. "We clearly said that the international markets for us were untapped potential, and certainly this new relationship will allow us to move much quicker as a combined organization than we felt we could move ourselves," said Tim Hortons president and c.e.o. Marc Caira He told investors nothing is going to change in Canada where Hortons operates 4,476 stores and holds more than 75% of the coffee market. Burger King operates 13,000 franchise locations. Com- bined the companies generate $US23 billion annually from locations in 98 countries. Burger King c.e.o. Daniel Schwartz said there are no plans to co-brand the ventures. "The real driver here is growth, and the ability to take such a strong and beloved brand internationally," he said. Hortons currently plans to open 800 new locations worldwide including the U.S. where it com- petes with Dunkin Donuts. Brazilian Coffee Shortfall The prolonged drought in Brazil has cut production for the second year which is driving up Arabica prices as global inventories decline. Brazil's National Coffee Council predicted a crop of 40.1 million 60-kilo bags, down 18% compared to last year, which was down 3.1% from 2012. Brazil produced 36% of the world's coffee last year. In late August Citigroup Inc. predicted a global production deficit may last into 2016 because of Brazil's shortfall. Arabica prices may top $US2.25 a pound by December, according to analysts. Rainfall is about half normal and unseasonal showers in July caused premature flowering that has damaged next year's crop leading to what may be the first three-year decline in Brazilian production in a half century. Robusta growers have been spared as rainfall is normal in the regions where it is grown. Global production is on the rise with Colombia, for example, harvesting its largest crop since 2008. Rising consump- tion is the complicating factor according to the International Coffee Organization which estimates a global deficit of 10 million bags in the year starting Oct. 1. Roasters are concerned about the 77% rise in Arabica prices on futures markets. Arabica accounts for 58% of global coffee production. It has been the best-performing commodity in the Standard & Poor's GSCI gauge of 24 raw materials since the first of the year. Onerous Import Regulations Like the Food Safety Modernization Act (FSMA) in the U.S., the Safe Food for Canadians Act (SFCA) sets a new course for protecting the food supply, and one provision of the SFCA in particular could have game-changing repercussions for U.S. importers, according to the National Coffee Association. As drafted these regulations could severely restrict the importation of green or roasted coffee into the country: To be licensed to bring coffee into Canada, importers would have to establish Canadian operations complete with staff and business address. Incorporating NEWS Advertising Representation: Global Glenn Anthony John (Thailand) Tel +66 22 55 66 25 Fax +66 26 55 22 11 Mobile +66 818 299 409 gaj@octobermultimedia.com The Americas / Northern Europe Emerson Leonard (United States) Tel/Mobile: +1 917 680 1050 edl@octobermultimedia.com Southeast Asia / Middle East Chris Michaelides (Hong Kong) Tel +66 22 55 66 25 Fax +66 26 55 22 11 Mobile +66 869 896 540 cam@octobermultimedia.com Spain / Italy Jonathan Wesley Bell (France) Tel: +33 563 414790 jwb@octobermultimedia.com Production/Distribution October Inter Co., Ltd. Bangkok, Thailand Tel +66 22 55 66 25 Fax +66 26 55 22 11 info@stir-tea-coffee.com Directors Glenn Anthony John Boonthin Tubsongkroh