December 21, 2016

London-based asset manager, Ashmore International, announced its most dynamic quarter to date with an overall total acquisition of 12,000 acres across six South American countries for US$50 million. Of this total, 8,000 acres are coffee farmland that were acquired for US$35 million.

“We had a very strong quarter in terms of both overall portfolio growth and operating results,” said Adrian Wright, CEO, Ashmore International. “From a portfolio standpoint, we had our most active quarter to date, adding over 12,000 acres of new farmland to our portfolio for approximately USD 50 million. These new farms are spread across six different countries in South America, providing further diversification to our portfolio.”

Founded in 2006, Ashmore International has grown to become a leader in the European asset management space with a global portfolio of €10 billion under management, according to the firm’s website.

With a commitment to sustainable development and socially responsible investment, Ashmore provides a client base of wealthy individuals and institutions with a competitive advantage through in-country expertise and service while also benefiting farmers in emerging markets.

“Since our establishment, we have been dedicated to helping the less fortunate farmers. Farmers are the reason why we exist. Initiatives like this goes a long way, both for the cause and for our reputation. It is our way of returning to the society and a contribution to an important industry of the global economy,” said Wright.

Coffee, anyone?

Ashmore explains that the firm decidedly targeted the bulk of their investment toward coffee due to the growth potential for coffee beans.

Coffee consumption in the U.S, the world’s top coffee market, is on pace to grow at a compounded annual growth rate (CAGR) of two percent per year to 2020, according to the International Coffee Organization (ICO), while global consumption is expected to see a CAGR of 1.3 percent per year, reports the Wall Street Journal.

Chicago-based Datassential explains that the lion’s share of this strong demand is being attributed to greater consumption by Millennials aged 19-34, who account for about 44 percent of U.S. demand. Indeed, Bloomberg reports that between 2008 and 2016 daily coffee consumption by people 18 to 24 years old increased from 34 percent to 48 percent, and in those aged 25-39 daily consumption climbed from 51 percent to 60 percent according to the National Coffee Association.

“Coffee has emerged as the winning beverage as [the] U.S. has turned away from soft drinks,” Ric Rinehart told the Wall Street Journal.

This demand is pushing coffee bean supplier to intensify their hunt for beans despite the challenges faced by growers in recent seasons including adverse weather patterns, drought, and diseases. For the 2015/16 season global coffee bean output total 148 million 60 kilogram bags, according to the ICO and for the 12 months ending September 30 world coffee consumption exceeded production for a second year in a row. Meanwhile the numbers continue to trend upward as global demand is expected to reach 160 million bags by 2020, reflecting positive market trends that could translate to a healthy return on investment.

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Lynda Kiernan