Cream of the crop: Colombian coffee growers turn the familiar Juan Valdez brand from an ad into a retailer.

For the 327 coffee-growing families selling their beans through El Jazmin, a cooperative in the mountainous Colombian city of Pereira, Juan Valdez is their ace marketer. Yes, the same Juan Valdez from the television commercials in the United States, although he's no longer on the tube.

Instead, Juan Valdez is now the name of a growing string of high-end coffee shops in Colombia and the United States. Coffee growers in Colombia hope he'll create a new market--and higher prices--for their goods. Juan Valdez coffee shops buy El Jazmin's products with a nice US$0.20 per-kilogram premium attached, a 20% wholesale price increase, says 53-year-old grower and cooperative president Jaime Gonzalez Arias. That's good news for growers. Coffee prices have suffered due to stiff competition from countries like Vietnam, who have contributed to a supply-side glut. "Juan Valdez shops are mainly a publicity strategy," says Gonzalez. "They will let us penetrate other market segments that interest us a lot, such as the youth."

Juan Valdez also gives growers like Gonzalez the chance to sell more than 60 types of select coffees. They see the chain as a great opportunity for the National Federation of Coffee Growers of Colombia, a 530,000-strong association that owns and operates the chain. Specialty coffee shops in the United States have boomed over the last several years, as evidenced by the success of Starbucks, which seems to be on every corner in the United States.

As the number of U.S. coffee consumers grows, so do their levels of sophistication, similar to their wine-sipping counterparts, which exploded in number in the United States, according to Juan Esteban Orduz, the federations president for U.S. affairs. "There are people out there buying coffee from specific plantations," he says. More sophisticated coffee consumers mean better margins. While the price for a pound of coffee in a U.S. supermarket can run between $4 and $7, a pound of higher-end coffee fetches $13 in a Juan Valdez shop.

The federation is not out to compete head on with giants like Starbucks, which operates 10,000 establishments around the world. Instead, the Colombian chain wants 30 cafes running by year's end in Colombia, Madrid and the United States, which already has three open for business. In five years, it wants 300 open worldwide. "I don't think that Starbucks looks at us as competitors. Besides, Starbucks is a key buyer of Colombian coffee," Orduz says. "Juan Valdez shops are just part of an overall growth strategy to position Colombia as the home of the world's best coffee." (Starbucks declined to comment.)

In 1959, Colombia's coffee growers introduced the image of a smiling Juan Valdez and his mule, Conchita, to the public. While no longer aired as a U.S. commercial, the symbol has played a fundamental role in the chain's advertising strategy. "This business is backwards," Orduz says. "We already have an established brand, but the business itself is barely off the ground."

The Specialty Coffee Association of America (SCAA), a non-profit trade organization that seeks to promote high-end coffees--also known as premiums or gourmet blends--wants a third of the U.S. population brewing the good stuff. Gourmet coffees only cover 10% to 12% of the market. Juan Valdez won't take any business away from coffee companies such as Starbucks, Peet's, Gloria Jean's, Second Cup and Caribou, says SCAA Executive Director Ted Lingle. "It will contribute to market growth," says Lingle. "I believe that it will keep the brand recognition alive even if the advertising was discontinued." In 2004, the U.S. specialty coffee market was a $9.62 billion industry, 30% larger than it was in 1999, according to SCAA figures. There were 18,600 high-end coffee shops in business in 2004, 55% more than six years earlier.

Each Juan Valdez coffee shop requires an upfront investment of between $350,000 and $1 million, according to the Colombian trade group. Juan Valdez recently inaugurated an outlet in Manhattan, and that coffee shop is breaking even already. The growers want eventually to franchise.

Bonanza. To manage the Juan Valdez chain, the group has created a subsidiary called Procafecol, which plans to sell shares in the second half of this year on the Colombian stock exchange. Only federation members may participate in the offering, expected to hit $8.5 million. Demand for premium coffees across the globe could lead to a boom. "They say the bonanza could last for a while," says Samuel Higuera, a 63-year-old coffee grower and president of the Caficultores de Tamara coffee cooperative in eastern Colombia Higuera. "We are proud that our product is so valued in places so far away."

ANDRES F. VELAZQUEZ * NEW YORK