Different views sink Aroma-PTT talks on merger

Aroma Group, the major local supplier of coffee beans and coffee machines, has aborted its plan for a merger with PTT, scheduled for next year, because of a lack of agreement over the future direction of the coffee business.

The cancelled joint-venture tie-up will not affect Aroma's revenues, thanks to its solid business foundation, the company said yesterday.

Aroma, which had earnings of Bt600 million last year, is also planning to import fresh coffee from its own production in Vietnam in preparation for the Asean Economic Community (AEC) in 2015.

Kijja Wongvaree, executive director of Aroma Group, an all-around fresh-coffee business leader in Thailand with a more than 50-year history, confirmed that his company and PTT had called off the joint venture. The group is, however, willing to maintain a good business partnership with PTT after the end of their current contract.

"Aroma Group has been working closely with PTT's Amazon coffee-shop chain since it had only 10 branches under its name and sold fewer than 10 cups a day.

"We are proud to have helped Amazon grow to become one of the world's biggest coffee-shop chains with nearly 1,000 branches and more than Bt3 billion in sales today," he said.

"However, it is not beyond speculation that PTT might decide to develop its own coffee-processing plant at some point.

"We have been fully aware of the possibility since Aroma first entered an agreement with PTT as the supplier of raw materials, coffee recipes and know-how for Amazon Coffee that after our contract ends in early 2014, PTT will either establish its own coffee production or contemplate the acquisition of Aroma Group.

"All these factors contribute to why we have been developing strategies and working tirelessly for six straight years to create such a strong and stable foundation for our business," the executive said.

Kijja said that over recent years Aroma had enjoyed constant sales growth of more than 30 per cent, which amounted to more than Bt1 billion in revenue last year alone.

About 20 per cent is the contribution from sales under the PTT deal, but this translates into only 10 per cent of the group's annual profit, which hardly makes a noticeable dent in overall performance, he said.

"The agreement that we had with PTT might expire but the pride, the knowledge and the skill to develop coffee business for both start-up enthusiasts and existing market players will remain with us forever. Now the opportunity is open, especially for those with whom we haven't been able to team up earlier as Aroma was bound by the contract we had with PTT," Kijja said.

"Aroma Group has been in the coffee industry for more than 50 years, which means that we possess experience and remarkable personnel with expertise like no others - some of whom are at retirement age but opt to remain as consultants to the group.

"All these factors, combined with our 10-year involvement in the network development for Amazon coffee shops, is a guarantee that Aroma will certainly be able to help other business partners grow to become other leaders in the market, in a better and faster way."

Kijja confirmed that Aroma planned to maintain its current sales and profit growth despite the approaching expiry of the contract with PTT.

In the meantime, the group is preparing to import instant coffee and raw materials from Vietnam for its production line in Thailand after the AEC comes into effect.

Aroma owns and operates a large coffee-processing plant in an industrial estate in Ho Chi Minh City.

The facility, which has a production capacity of up to 2,000 tonnes per year, has been generating as much as Bt600 million annually in recent years as a producer and exporter of roast, ground and instant coffee to both Western and Eastern Europe, the United States and Australia.