July 1, 2008 / 8:15 AM / 12 years ago

Chinese coffee grower eyes listing for expansion

SHANGHAI, July 1 (Reuters) - A Chinese coffee bean supplier to Nestle NESN.VX said on Tuesday it aims to become the country’s first listed coffee producer by 2011.

Dehong Hougu Coffee Ltd, which called itself China’s biggest coffee grower, seeks to raise 3 billion yuan ($437 million) selling shares publicly for expansion.

“China has a huge potential for coffee business,” Vice President Deng Gang said by telephone. The company is restructuring itself and has hired accountants and lawyers for the planned listing, he said.

China’s nascent, but fast-expanding coffee market is dominated by foreign companies, including Nestle, Starbucks Corp (SBUX.O) and Coffee Bean and Tea Leaves. Coffee consumption in China, though small, is growing 20 percent a year, Starbucks has said.

Hougu, which is based in southwestern Yunnan province and mainly grows coffee for exports, needs funding to expand its own processing and retail businesses.

It is already selling its own Hougu-branded coffee in Yunnan through retail outlets as well as its own coffee shops, and has plans to expand sales outside its home base. Hougu means “back valley” in English.

“We’re transforming from a coffee grower to a branded coffee maker and seller,” Deng said. “Nestle is still our client and we’re still too small to compete with it.” (US$1=6.8587 Yuan) (Reporting by Samuel Shen; Editing by Louise Heavens)

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