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Czechoslovakia: returning to a freer economy.

In the past, Czechoslovakia had two companies for the coffee industry: Koospol, for the purchase of green coffee and Balirny, for the roasting and distribution of coffee. Koospol's huge office complex is situated right on the main road from the airport, a rather convenient location for the bustling purchase trade. Balirny has nine packing and roasting facilities scattered throughout Czechoslovakia. Up until 1990, Balirny was state-owned; they are now in the process of privatization. Koospol and its subsidiary, Centrocom, are also in the same procedure.

The privatization process in Czechoslovakia is based on so-called voucher method, i.e. distribution of the shares of the companies among the population. Other methods of privatization are the direct sale to previously chosen investor (foreign or domestic), the sale on auction, restitution or the emission of the shares for employees. The privatization process is a rather complex procedure that enables a foreign investor to acquire 32% of the company's shares; 10% is owned by the bank; 30% is also available to the private through a coupon method; 5% can be owned by the employees; and 3% goes to the fund of reprivatization. the remaining 20% goes to an exchange (this example is a composite of practically all methods, but is not typical).

Czechoslovakia's roasting industry includes Balirny A Sklady Roudnice N.L. which is located 40 km from Prague (story on page 22), Prazirny A Balirny Praha S.P. produces 7,000 tons of roasted coffee and Balirny Jihlava's production capacity is estimated between 9-10,000 tons/year with actual production for 1991 to be at 7,000 tons. Arko Varnsdorf is a small factory with old equipment which produces only 800 tons of coffee. In Moravia, Valasske Mezirici has a capacity of 7-8,000 tons for coffee and produces 5,800 tons. Balirny in Bratislava has a capacity of 3,000 tons and just about roasts to capacity each year. Baliarne Poprad in East Slovakia, also, almost produces up to its capacity of 4,500 tons. Morvika, a totally new company in Moravia has been established. So far, the company has produced 500 tons, and its capacity is not yet known. The company is said to be a joint venture between an Austrian entrepreneur and Czechoslovakia.

The major European roasters are beginning to enter the CSFR market. Tchibo has established two stores, Douwe Egberts coffees are being imported in a small capacity (Now, it has been established that, as of March 92, DE owns an interest in Balirny Praha), and Alvarado, a major Austrian brand, is present both on and off the black market.

Coffee smuggling is extremely high across the borders. Ever since the Austrian/Czechoslovakia borders were opened, smuggling has risen incredibly. The nation's people have acquired a taste for Austrian coffee which they originally received as gifts and may at times been cheaper than their own coffee. Smuggling has risen so rapidly that 7,000 tons from Austria alone in 1990. Both roasted and green coffee are smuggled from Austria. Last year this non-official import number decreased as the quality and taste of foreign coffee are very different and the price of Czechoslovak coffee remains stable in spite of inflation (1991-around 54%).

Imports of green coffee for 1990 were recorded at 31,000 tons, down from the 1989 figures of 37,000 tons.

The Czechoslovakia coffee blends are no more than 20% Robusta, said Vaclav Lohr, commercial director, and Ivan Sinkovic, coffee and tea department, at Centrocom. The cheapest coffee available in the CSFR is a standard 20% Robusta / 60% Quality #2 (Santos 4, Central America Hard Bean or High Grown ((HB or HG)) or India Plant B, and 20% Group 1 which includes Colombian, Central America Strickly Hard Bean and Mexico Altura. This is the expected standard for coffee purchases and blends.

The Czechoslovakian people prefer Arabica blends and consume Turkish type coffee. The Centrocom people see more of a trend to buy filtered coffee. Coffee consumption has remained the same over the last several years, though, since 1970, it has doubled in consumption.

Centrocom expects the country to be importing between 28-29,000 tons of green and 3,000 tons of roasted coffee for 1991. Centrocom imports from country of origin and in cooperation with some of the European traders in Germany, Switzerland and the U.K. It is now possible, says Vaclav Lohr for anyone to import coffee. Centrocom imports 55% of the CSR green coffee market, and at the time of my visit, November 4th, they has already imported 15,000 tons. Centrocom is not a state owned company nor is it private; it is a limited company on shares, main shareholder is Koospol Ltd. The privatization of companies in the CSFR started in 1991. Companies must submit privatization proposals to the government. Each company has its own privatization policy and the firms must practically queue up for the appropriate time the privatization plans are granted. The policies are granted in waves; the first sequence is expected to be granted in the first half of 1992, the second wave of grants in the latter half of 1992. All firms are expected and intended to be private in 1993.

To tour the Eastern Bloc countries and not get involved in their politics and economies is impossible for me. I needed to better understand the people and their beverage habits as well as the political climate. Politics make the economies which make the world go around. The Communist party which was so prevalent in the CSFR had 1.7 M members just a few years ago; it now has 300,000 people. The nation has about 100 political parties.

The country, after years of destruction, depression, disruption, and stagnation, has managed to have a sense of humor. There is party representation for some rather interesting categories: Party for the Beer Drinker, Party for Permanent Opposition, and Independent Erotic Movement. Seriously, only 7-10 parties have the chance to have representation in the Parliament. The Civic Democratic Party holds 20%, Communist - 9%, Socialist -8%, and the Movement for Democratic Slovakia hold 30% of the preferences in Slovakia.

There is also tea imported into the CSFR. Two tea packing facilities are located in Prague and Jihlava in Bohemia; and two other packing plants are located in Poprad and Bratislava in Slovakia. Tea consumption is very low as compared to Poland. In the past, 2,500 metric tons were imported. People tend to consume tea similar to water and in the colder weather, consume more tea. Centrocom also imports 80% of bulk tea into the country. Czechoslovakia is anxious, eager for privatization, free enterprise. Fortunately, this country has had its freedom earlier than others.
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Title Annotation:privatization boosting coffee roasting and tea industries
Author:McCabe, Jane
Publication:Tea & Coffee Trade Journal
Date:May 1, 1992
Words:1112
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