Excerpts from Q&A between shareholders of Food Empire and the company in connection to the AGM for FY2020. For the full Q&A that was uploaded to the SGX website, click here.
| Congrats on the completion and start of operation of Food Empire's second coffee plant. Could you share with us a) the business model of the plant b) where coffee beans are sourced from, the key processes inside the plant c) the target customers d) the potential annual revenue based on maximum capacity & recent coffee selling price, assuming 100% of production is sold to 3rd parties e) What was the capex of the plant and how much was the debt incurred to finance it? |
The plant was initially scheduled for completion and commercial production in mid-2020. Covid-19 restriction measures in India delayed it until foreign OEM suppliers were allowed entry into the country to test and commission the plant. Photo: CompanyFollowing the successful commissioning of the Group’s first Spray Dry coffee plant in 2015, our second plant will produce Freeze Dry coffee, which represents a further expansion into the food commodities manufacturing space as part of the Group’s vertical integration strategy.
The Freeze Dry coffee plant is an enhancement to our existing capability and will produce a higher value-added range of coffee products.
These factories not only support our branded beverage business, it also opens up a new B2B market for the Group.
Coffee beans used for the production of coffee powder are mainly sourced from Vietnam, Africa, India and South America.
Key processes involve Roasting, Grinding, Extraction, Evaporation, Freezing and Packing.
Around 30% to 40% of the finished products will be supplied to entities within the Group and the remaining will be sold to external parties such as Brand Owners and Traders.
The Group is looking to market them to customers in Russia, Ukraine, Eastern Europe, Middle Eastern countries and the Asia region. 
Our Freeze Dry plant is a long term capital investment that will provide the Group with greater procurement flexibility, better margins and a recurring income stream.
Commodity prices tend to move in cycles and coffee prices are currently at a low.
Based on prevailing market rates, if the entire capacity of our Freeze Dry coffee plant is sold to 3rd party, revenue uplift to the Group would be between USD25 million to USD30 million, depending on product mix.
Total Capital Expenditure (“CAPEX”) for the Freeze Dry plant is around USD50 million. About 70% of the CAPEX is debt funded.
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