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Czechoslovakia: coffee roaster intent on market expansion.

I can't say Czechoslovakia is a beautiful country at the present time. Prague certainly is an idyllic medieval wonderland. What I observed was a country that time stood still, much like Poland, for some 50 years. But, Prague is much more colorful. Prague resembles a town in the 1300's with its medieval bridges, castles and village streets, which miraculously remained intact after major political strife. When I ventured outside Prague, en route to Balirny a sklady Roudnice n.L. (BASK), I saw abandoned homes that have not been touched for 50 years, buildings in ruin, farm fields with no sign of life. I couldn't help but get caught up in the country's history.

Prague is a bustling area, medieval in its beautiful architecture, awesome in some of the cities' views overlooking the Vltava River. The Western European countries are rapidly entering the market.

Milford Tea, part of the OTG group and a packer of teas, has a shop in one of the most colorful sections of Prague. Tchibo has two shops in Prague, one which is situated on the most highly visited tourist squares. I had the fortune to imbibe a large cup of cappuccino and a sandwich for $1.00. The shop was packed with the people buying fresh baked bread and coffee, of course.. Feeling as if I just had the best bargain in town, a Czechoslovakian friend later told me Tchibo is one of the more expensive cafes. Milford's agent informed me its store has had a large number of responses.

In the Western countries' quest for privatization, several firms told me one has to be sympathetic to monopolies in order to get into the privatization process. There is much red tape and bureaucratic details to follow. The privatization program is often referred to as |secret', offered only to private "Trade Officers". It is the Trade Office that chooses between foreign ideas/companies and the domestic program. The State intends to keep a strong interest in production.

Taxis are abundant in the city of Prague. Taking a taxi from the street costis about a third of the price of a hotel taxi (where would you learn these great travel tips from?) I traveled for about an hour and a half, leaving Prague and entering the suburbs where BASK is located. At the time of my visit in November, the company was eagerly looking for foreign investors.

Talking with people, I again hear the phrase, "In the past" from the Czechoslovakia people, a phrase I first heard in Poland. ("In the past" refers to the pre-Iron Curtain fall.)

In Czechoslovakia, there are three coffee and tea manufacturers, one is BASK, and two are in Slovakia in Bratislava and Poprad. Coffee is packed in paper bags. Balirny, built 20 years ago, upgraded its production line in January 1991 and can now package 100 g, 125 g, 250 g, and 350 g bags. In the current age of privatization and newly found competition, the company will feature a new design on its coffee products which will include an aluminum foil plastic covering in gold.

Speaking with Zdenek Janda, he tells me the company expects production to rise. The company has been revamped since |the past,' and the people in key managerial positions are in their late 20's, early 30's. The group has been at Balirny for just over two years. The current managing director is 33 years old.

BASK is situated in a good geographical location. It is close to Germany, Poland, and Austria, on the river Labe. The company is helping to restore the port. The railway from the main line runs adjacent to the factory. The management proudly claims it is the first factory packing food from the West, and the factory boasts a quantity of 27 silos large, plenty for its coffee, rice and bean production and more for expected growth.

Czechoslovakia has very few factories, and Balirny's management team feels its facility can accommodate the consumer's desire for coffee. In the past, all the factories in Czechoslovakia were state-owned and named Balirny. The privatization process is slowly drawing financial partners from the Western countries No one cared about packaging in the past because there was no competition. Now, each Balirny is in competition with one another as well as with the Western European coffee manufacturers which are entering the country.. Tchibo advertises in Czechoslovakia, but its prices are considered expensive for the economic-stressed consumers. Balirny is unsure as to the length of time consumers will stick to traditional brands. Almost 90% of coffee consumed is Turkish in style.

Balirny purchases coffees from Columbia, Peru, Central America, New Guinea, India, and Africa. It purchases three different qualities for all internal production, blending the three for its special blend. Coffee is purchased from reputable firms with a strong financial background, especially the Hamburg importers as Hamburg is its closest port. BASK also purchases from Koospol, the state-owned monopoly, but only if they're cheaper. Nevertheless, about 50% of BASK's green coffee comes from Koospol. Production of the facility is between 2,000-3,000 tons roasted coffee annually. Roast quality is checked five times a day.

The company figures it provides 8-10% of all the coffee in Czechoslovakia. Vacuum packs are on the agenda for the new marketing program the company has inaugurated.

The company's roasting equipment is all supplied by Probat, and Balirny told me that Probat has supplied most of the coffee roasters throughout Eastern Europe. Probat has had a long-standing history with Eastern Europe. Two of the smaller 30 kilo roasters in Balirny are of Italian origin -- Petroncini and Officine Victoria.

BASK is confident of the future. It foresees more machinery and increased consumption/share of the market.
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Author:McCabe, Jane
Publication:Tea & Coffee Trade Journal
Date:May 1, 1992
Previous Article:Czechoslovakia: returning to a freer economy.
Next Article:Probat: keeping ahead in a dynamic industry.

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