(Updates with details about the shop in New York, the company’s history and the Juan Valdez brand.)
BOGOTA (MarketWatch) — The Juan Valdez chain of Colombian coffee shops will close its flagship Times Square branch in New York City on Feb. 28 due to the high cost of rent and changing spending patterns among U.S. coffee drinkers, the company’s chief executive told Dow Jones Newswires.
The opening of the store in 2004 in the heart of Manhattan had such symbolic importance for Colombia’s coffee industry that Colombian President Alvaro Uribe flew to New York to be with Juan Valdez and his mule Conchita for the opening ceremony.
U.S. consumers are buying more coffee from supermarkets to drink at home, and less from coffee shops, said Catalina Crane Duran, chief executive of Procafecol SA, the holding company that manages the Juan Valdez brand.
The Times Square and Washington D.C. outlets were the first Juan Valdez coffee shops to open outside Colombia, and were intended to be the start of a major international expansion aimed at competing with Starbucks Corp.
The company later opened a store on Starbucks’ home turf of Seattle, although it has since closed.
Procafecol’s international expansion plans were heavily focused on the U.S. and Spain, two markets that have been badly affected by the global economic downturn, Crane said.
Procafecol has also closed some of its loss-making Spanish outlets in recent months, but has also opened new stores there. The company’s plans will depend on how quickly consumer spending recovers.
“We aim to open another two soon, and then we’ll see how the economy goes,” Crane said.
Procafecol posted a net loss of 11.4 billion Colombian pesos ($5.9 million) in the first nine months of 2009, widening from a COP7 billion loss in the first nine months of 2008, according to its filing to the local market regulator. Sales increased to COP56.9 billion over the same period from COP53.1 billion in the first nine months of 2008. However, sales from Procafecol’s foreign outlets fell to COP7.9 billion from COP9.5 billion.
Juan Valdez has expanded rapidly since opening its first coffee shop at the Bogota airport in December 2002. The company now operates around 120 outlets in Colombia, 10 in Chile, 10 in Ecuador, six in the U.S. and four in Spain.
Procafecol is about 80% owned by Colombia’s National Federation of Coffee Growers, or Fedecafe, and around 10% of the shares are directly owned by individual coffee growers.
As well as running coffee shops, it sells a range of products including roasted coffee to supermarkets, clothing, coffee-flavored candy and refills for coffee machines.
Juan Valdez and his mule are among the most recognized advertising icons in the U.S., and in 2005 the character was awarded the title of “Advertising Icon of the Year” by Advertising Week. The character is played by a coffee farmer from Colombia’s Antioquia province, rather than by an actor.
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