MANILA, Philippines — Asian food conglomerate Jollibee Foods Corp. (JFC) has no plans of bringing value coffee brand Compose Coffee to the Philippines over the near term, saying that its focus is to grow the brand further in South Korea.
During an online media briefing yesterday, JFC chief finance officer Richard Shin said the group sees significant growth opportunities for Compose Coffee only in South Korea.
“Compose Coffee is sitting at eight percent market share in Korea, so we think there’s plenty of focus and opportunities. We’re very excited about that and we’re going to continue to grow in Korea,” he said.
JFC early this month announced that it is set to acquire a majority shareholding of 70 percent in Compose Coffee Co. Ltd. and JMCF Co. Ltd., collectively called Compose Coffee, for approximately $340 million through its wholly owned subsidiary Jollibee Worldwide Pte. Ltd. (JWPL).
The remaining shareholdings in Compose Coffee will be held by Titan Dining II LP and Elevation Equity Partners Korea Ltd., with effective shareholdings of five percent and 25 percent, respectively.
Shin said the parties involved want to complete the acquisition by the first half of August.
“There is no plan to bring Compose to the Philippines. At eight percent market share in Korea and our infrastructure, particularly real estate planning, everything being in Korea, we’re very focused on Korea for at least the next five years. We want to take market share growth in Korea that will give a better return on shareholders,” he said.
However, Shin said that if there are people who are very experienced and would like to have a crack at China, for example, as a franchisee, then they would not necessarily say no.
“But we’re not investing our capital in that way. China’s a tough market. And I say it’s a tough market because even Starbucks as great as it is, they’re starting to feel it in China. It’s quite challenging in China, so we wouldn’t be going in that direction. Certainly, our number one, two and three focus is still in Korea,” he said.
JFC’s acquisition of the South Korean value coffee brand aims further to fortify the group’s coffee and tea business.
JFC’s growth strategy in scaling its business includes growing its coffee and tea business and ramping up franchising in key markets globally.
JFC sees the strategic and financially lucrative investment in Compose Coffee as its gateway to unlocking the fast-growing international value coffee market in South Korea, which ranks third globally in terms of coffee consumption per capita.
As of end-June, Compose Coffee has 2,612 stores.
JFC said Compose Coffee ranks first in the industry for having the highest growth rate in the number of franchised stores and in terms of brand satisfaction among Korean coffee brands.
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