Artisanal coffee processor Trumpet Tree tripling output - Hunting markets in Canada and Japan
In three years, Arthur McGowan expects his midsize business, Constitution Hill Trumpet Tree Coffee Factory Limited, will be processing around 60,000 boxes of green beans, which would triple its current output.
But that's the plan as conceptualised by the small investor. It's full execution, which is expected to cost as much as $147 million, rests on whether McGowan can find markets for the coffee.
And for that he is banking on coffee marketer Blue Mountain Coffee Inc, operated by Edgar Munn in Atlanta, Georgia, in the United States, which currently handles Trumpet Tree's distribution.
McGowan, a farmer-turned-processor and trader, also depends on Munn for advice about the coffee business. "He is the main one behind this," McGowan told the Financial Gleaner, while outlining his plan to expand.
Already, Trumpet Tree has small export markets in Europe, Korea and China. McGowan says he is also in talks with Starbucks International to supply the chain with Blue Mountain coffee - Starbucks currently buys beans from Wallenford and Gold Cup estates in Jamaica - and he is heading to a coffee and tea trade show in Canada this month, then later to Japan, in search of new buyers.
McGowan, whose farms are located in Flamstead and Constitution Hill in St Andrew, has been engaged in processing for the last six years. At first, he subcontracted the drying and sorting of beans to other processors, before taking the plunge and opening his own factory.
Land for the factory, comprising 1.75 acres in Constitution Hill, was purchased in 2014, and the facility was built out gradually to its current capacity of 20,000 boxes, which the factory achieved at the end of the last crop year in July 2018.
The factory is supplied from four farms owned by Trumpet Tree, as well as Munn's farm, Flamstead Estate. Trumpet Tree also buys coffee cherry from Blue Mountain farmers in the rural hills of St Andrew.
Munn told the Financial Gleaner that artisanal coffee produced by small processors like Trumpet Tree, using traditional and largely non-mechanised methods, is in high demand in the speciality coffee market due to the taste. Artisanal coffee tends to be of a higher quality, he said.
Trumpet Tree more than doubled its production this year, having processed 9,000 boxes for the 2017 crop, but McGowan said the factory's low utilisation then resulted from cold, rainy weather in December 2016, and his lack of a drying machine.
Trumpet Tree has since procured a machine from another processor for nearly $7 million, which is capable of drying 10 tonnes of beans, or just over 2,200 boxes.
To meet his goal of tripling the factory's capacity, McGowan plans to add three additional drying machines to the one purchased in December 2017, as well as sorting machine that would automate a job now done manually.
Trumpet Tree has a 1,250-square-foot warehouse, which is 15 feet high, and has already began constructing a second of similar dimensions, while a third is in the planning stages.
"We also need to put in another picking area for the pickers and sorters," he said.
Financing for expansion will be mostly from cash flow, but Trumpet Tree has also received advances from Munn's company and is also planning to tap its bank for a loan, McGowan said.
He said he has spent $47 million to date on the factory, and believes full execution of his capex plan would need another $80 million to $100 million of funding.
"Within another two to three years, if we continue on the same path, we will get there," he said.
The only limiting factor, he added, was finding new markets, which has been a slow process. However, McGowan says the buyers he hopes to secure on his Japan and Canada trips should serve to accelerate the expansion plan.