Cooks completes Chinese Esquires coffee deal

Listed Kiwi Company gains control over growth mark

Article as appeared in NBR, 19 Feburary 2015

Cooks Global Foods’ (NZX: CGF) has successfully completed the purchase of its Esquires Coffee Houses master franchise in China.

Cooks signalled the purchase of Beijing Esquires Management Co. Limited (Esquires China) in September last year.

The deal makes the company the third largest Kiwi employer in the Peoples’ Republic after Fonterra and the NZ Government with approximately 180 employees in China.

Esquires China was formerly owned by three shareholders including Beijing Yunnan Building Hotel Co. Ltd (BYBH), wholly owned by Yunnan Metropolitan Investment Company (YMCI) which is in turn owned by the Yunnan Provincial Government.

Yunnan is a province located in the southwest of China with a population of 46 million people.

Now with a 15.8% per cent shareholding in Cooks Global Foods, YMCI is the second largest shareholder in the company.

Cooks Global Foods chairman Keith Jackson says the franchise purchase delivers a strong cornerstone shareholder to the listed company.

“YMCI is a company with a capital value in excess of US$800 million and part of its assets are listed on the Shanghai Stock Exchange.

“The vendors remain very keen to be part of the growth of the Esquires brand and the coffee industry itself in China and internationally through the shareholding in the Esquires global business, that they now have through their Cooks shareholding” Mr Jackson says.

“We were able to come to an agreement to buy back the master franchise business for China and the vendors took a shareholding in Cooks. Effectively that provides Cooks with a more direct interest in China, the world’s fastest growing coffee market where branded coffee is in its infancy.”

“The big brands are in there and that’s great for us because it spreads the coffee gospel. Our aim is to accelerate the growth of the Esquires business in China through expansion in conjunction with both existing and new partners building on our core principles of Organic and Fairtrade coffee from New Zealand.”

Mr Jackson says there is a strong management team in China under Ellen Zhang who is a former Esquires Franchisee at the Auckland Quay Street café, part of the Countdown Supermarket complex.

“Ellen manages a very good team, many of whom have experience with international brands such as Starbucks. In fact, NZTE advised us that we are now New Zealand’s third largest employer in China, behind Fonterra and our government,” Mr Jackson says.

Esquires recently opened its 21st Esquires store in China at the second stage development of Beijing’s Surprise Outlets, a shopping centre of more than 35,000 sq. m. The store is being officially opened by Minister of Trade Tim Groser on 2 March 2015.  Mr Jackson says the aim is to have more than 200 stores operating in the Peoples’ Republic of China by 2020.

Under the intellectual property rights owned by Cooks Global Foods, Esquires Coffee Houses operate in Ireland, England, the Middle East, Canada and China serving more than 20,000 customers a day.