British Co. Invests in Cuban Coffee Market

January 16, 2014 |

Coffee beans. photo: epha

HAVANA TIMES — A former British MP and Treasury Minister has made a deal to invest in Cuban coffee farming, reports the Telegraph on Thursday.

With his Cuba Mountain Coffee Company, Businessman Phillip Oppenheim will invest some US $4 million over five years in a coffee growing community in southeastern Cuba.

Cuba’s coffee production has suffered a sharp decline over decades. According to the UN Food and Agriculture Organization the total number of hectares where coffee is harvested in Cuba fell from 170,000 in 1961 to 26,935 in 2011.

Oppenheim said his investment in coffee tree nurseries, to renovate plantations, and in the post-harvest pulping process, “will improve the quality and the quantity of the coffee produced.”

The former minister owns a Cuba-themed bar near Waterloo in London. “I buy rum and raw sugar from Cuba for the bar,” he told the Telegraph. “It’s a small country, so you get to know people.”

The deal enabling the investment was possible under the economic liberalization taking place with the reforms being implemented by the Castro administration. Oppenheim said the agreement shows that Cuba is becoming a new market for entrepreneurs.

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  • Moses Patterson

    Assuming that Oppenheim is a normal businessman, he would seek return on his investment. A $4 million investment over five years at a reasonable 8% return per year would yield $1.87 million in profit. However, Cuban law requires 51% or $958,000 of that profit go to the regime. That leaves only $912, 000 in profit after 5 years for this investment. Oppenheim could purchase tax-free high-grade bonds and do better than that. This investment alone does not make sense unless Oppenheim believes Cuban coffee will return a lot more than 8% per year and he is looking at a very long term investment to pay off beyond the current forecasts for the coffee market. World coffee prices have FALLEN precipitously over the last five years due to increased supply in the market. Brazil and Colombia, the largest growers in Latin America have been forced to subsidize their growers as production costs exceeded price. Cuba is rated among the worst countries in the world for foreign investment and Cuba has recently jailed foreign investors and expropriated their investments at all time high numbers. Something smells very funny about this investment and it isn’t the coffee.

  • Griffin

    Mr. Oppenheim should have spoken with he fellow Britian, Stephen Purvis, about the wisdom of doing business in Cuba. Purvis’s firm, Coral Capital, spent $400 million developing a golf resort in Cuba. The suddenly in 2012 Purvis was arrested on dubious “corruption” related charges. He spent 16 months in a Cuban jail, most of the time at Havana’s notorious Villa Marista spy interrogation centre, before he was finally released.

    Last thing I heard, the Cuba government was shopping around the golf club report to Chinese investors to help them finish building it. Good luck with that, Raul.

    Oppenheim is a craven fool.

  • emagicmtman

    Coffee grown in the Sierra Maestra is really first class, so I suspect there is a potential market here waiting to be redevloped. Although some Colombian coffee is good, much is not, and of course most sun-grown Brazillian is strictly for Dunkin’ Donuts and worse (as is Brazilian grown beef, grazed on former rain forest lands recently cleared, and usually winds up between Whoppers and Big Macs buns)!

    • Moses Patterson

      Good coffee starts with good beans but the difference between a good and a great cup of coffee is in how the bean is roasted, the quality of the water and even the coffee pot. (French press method is my personal favorite) One reason Cubans drink their coffee ‘expresso’ strong is that the quality of the bean is good but not great. The best coffee fruit make for the best coffee and is better served robust but not as expresso. Turkish coffee is the example of bad coffee served as strong as possible to mask poorly grown beans. Cuban beans are respectable and better used in blends, especially the darker roast blends. Brazil, Vietnam and Colombia are by far the largest three coffee producers in the world. Given the close economic ties between Brazil, Vietnam and Cuba, it is not likely that Cuba will make decisions to compete directly with these two countries in the coffee business. I’m no Warren Buffett but I wouldn’t invest a dime in the Cuban coffee business.

      • Griffin

        The correct term is “espresso”, not expresso.

        I didn’t care for the Cubita brand of coffee, but I quite liked a one that came in a green bag, available in dollar stores, called Regla. It was rich and smooth. I’ve heard the taste can vary quite a lot from batch to batch as quality control is non-existant in Cuba.

        • Moses Patterson

          Hahaha! Frickin’ spellcheck!

      • Jessica

        We drink espresso coffee in Cuba because is part of so many years of culture and tradition no because is not great . It is ridiculous that entire concept you have explain Patterson. The best Cuban coffee grows in Baracoa and Maisi, the last two towns in eastern Cuba. These two cities have the highest amount of rain fall and humidity in the entire island of Cuba and the climate and land are so ideal that coffee grows wild. I agree about Moses factors to obtain a great coffee but the rest of the info about Cuban coffee not being great is so poor. We grow the coffee all organic and the way we dry the beans is in the sun . All school!!!!. Also we grind the coffee very thing that determines why we can obtain such a espresso. I have bought Colombian , Brazilian… coffee and none of them is as great as Cuban coffee. when i have given Cuban coffee to my friends from Canada and all around Europe they can’t stop complementing it. Sir, you wouldn’t invest a dime in the Cuban coffee business because you don’t have money for it, hahahahahahah, sorry and if you have money you know nothing about coffee business, hahahahahah

        • Moses Patterson

          Your Canadian and European friends probably do not wish to hurt your feelings. However, more objective coffee experts around the world are in general agreement that the best coffees in the world are from Brazil, Ethiopia, Costa Rica, India, Vietnam, Colombia and Indonesia. Listen, Cuban coffee, alongside other Cuban foods is actually pretty good. But given your clearly understandable but broken attempt in expressing your opinion in English, I assume your first language in not English and perhaps you are Cuban. You should be proud of your coffee. But even the best Cuban coffee does not compare to an average Brazilian roast. Given the money and stuff that I send to my family in Guantanamo every month, I might as well be investing in Cuban coffee!

          • Jessica

            Hi my friend. hahahahah I like you Patterson. Your opinion does not represent any major percentage in how great Cuban coffee it is. If you have have some frustration in the Psychological field , then go back to school. English is not my first language but this discussion is about coffee not which is my first language or my nationality. Pride is not a good thing according to Buddha, so i am not proud of anything sir. I can see you have some anger in your heart. Take it out before turns into a heart attack, hahahahahah. i was not interested in Knowing about how often you send stuff to Gtmo… I understand that the info you have provided about many countries that are veterans in the production of coffee is taken from Wikipedia not because you have so much knowledge in the field . Cuban coffee is great but it is not popular or well known because never has been at a big scale in the international market. To judge something you have to live the experience. The Cuban coffee you have tried i assured you had chicharo, hahahahahah ,
            try the pure one from Maisi o Baracoa. My English is not that good but you understood that Cuban coffee is GREATTTTT!!!! hahahahah can we discuss this topic in french or Russian? ttys Patterson

          • Moses Patterson

            Jessica, I like you too. The reason Cuban coffee is not rated among the best-tasting has nothing to do with the lack of international sales. Taste experts seek out even the most obscure coffees for their competitions. Cuban coffee is not bad. It is simply NOT great. Like your nationality or language skills, the condition of my heart is not relevant to this discussion either. Thankfully, San Francisco, where I live, has coffee shops which serve coffees from all over the world so I would disagree with you regarding my knowledge of great tasting coffees. I also happen to drink Serrano or Cubita brand Cuban coffee all the time so does that qualify as “living the experience”? What is “the pure one from Maisi or Baraoa”? Which brand is that? The Cuban coffee that most Cubans drink that is sold in the bodegas or on the street for 15 Cuban pesos blended with chicharos is almost undrinkable. Believe me, I tried. I don’t speak Russian but I could dust off my French.

          • Griffin

            Can you buy Cuban coffee in the US? I don’t think so. The embargo still bans the importation for sale. That would be the main reason Starbucks does not sell Cuban coffees in among their varieties.

            We can buy Cubita and Serrano brands in Canada, but it is only found in a few specialty shops. At $39 per kilo, it is not worth it.

            http://www.canadahumidor.com/premium_coffee/?gclid=CJnY18uikLwCFcERMwodE0QAZw

          • Moses Patterson

            No, Cuban coffee is not available for retail sale. It’s strange how much Cuban coffee, rum and cigars are still available in the US despite that horrible embargo.

          • flipflopfever

            I like your English. Nicely spoken! Poor Mr. Patterson and his stick-up-the-bum comments.

    • Moses Patterson

      Wrong again! But don’t take my word for it. See for yourself what the ‘coffee experts’ say: http://www.pacsafe.com/blog/wheres-the-best-coffee-in-the-world/

  • alma de cuba

    emagicmtman is largely correct. Cuba used to be the leading exporter of quality coffee in the ’50s, but they let it slip and Cuban brands such as Cubita and Serrano don’t cut it internationally. A lot of coffee – not just Cuban – is also high roasted to hide medicocre quality.

    Good coffee is grown in the Sierra Maestra – but not much as it’s too dry. The best comes from the higher mountains of Guantanamo province on the other side of Santiago; and from a small area of the Escambray close to Trinidad – we’re getting our coffee from there until the Guantanamo production is restored, partly with our investment.

    Griffin and Moses are partly right about Cuban coffee – but wrong about the rest. Coral Capital were not involved in the Varadero golf course/condominium project – $100m, not $400 – that was Havana Holdings who never got the funding anyway and have apparently sold the project on to Panamanian investors at a small loss. Coral were mainly short term trade finance – and investors I know say the Cubans were right to close them down.

    Finally, Alma de Cuba is not a joint venture and keeps 100% of any profits – it’s a testament to Cuba’s steady reform process that these sort of projects are now being allowed; and we look forward to playing our part in restoring Cuba’s coffee to its rightful place as a major, quality, export crop.

  • Griffin

    Cubana owner Phillip Oppenheim tells us how he swapped the House of Commons for mojitos and salsa:

    “I had always wanted to be in the bar-restaurant business. My then girlfriend suggested Cuban.

    “At first we thought it was a bad idea. But together with investors I went to Cuba and we discovered mojitos, salsa music, tropical communist chic and all the rest.

    “The only problem was the food – which was a bit…communist! However, we found old pre-revolutionary cookbooks in a market and some old plantation chefs and discovered traditional Cuban cooking – less spicy than Mexican or some other Latin American cuisines.

    “That’s how Cubana was born – with an ethos of authenticity, value, quality ingredients and freshness.”

    http://www.wearewaterloo.co.uk/articles/latin-flavours-lower-marsh-0

    Communist chic??? I wonder if the walls of his trendy London restaurant are decorated with authentic Cuban “Paredon!” bullet holes?

    According to Wikipedia, Fidel Castro is a shareholder in his London restaurant.

    http://en.wikipedia.org/wiki/Phillip_Oppenheim

    • flipflopfever

      …Raspberries.

  • Henry Delforn

    Statement obviously misleading with agenda. World coffee prices have NOT fallen precipitously over the last five years, as they have also RISEN precipitously in the same time period. Again, misleading with agenda. Fact is that nymex coffee futures (all KT contracts) are slightly up over the last five years (Jan 2009) at $1.172 per 37,500 pound contract after finding very strong support back in November at $1. Likewise the spot market. Coffee and its derivatives have huge up-side potential due to just coming off huge support…so back up the truck! You might also want to take a look at a few related underlying instruments (the cash) in the same time period that you’re bad mouthing, including the Herzfeld Caribbean Fund (NASDAQ ticker CUBA), up from a low of $3 to now over $8/share. I won’t even talk about Starbucks in the last 5 years, wouldn’t be fair … just under $80 today from under 20 five years ago. Compare Ethiopia and Cuba coffee exports, both with essentially with the same GDP, and you’ll see the potential up-side to Cuba’s export coffee investment.

  • flipflopfever

    I almost LMAO! If it was not for the fact that my brother owns a coffee roasting business and is a roaster, I might take you all seriously. Strictly Fair Trade from family owned plantations. I agree with Jessica and admire that she holds true to her cultures.