CREATING VALUE

Costa Rica 2019 | AGRICULTURE | INTERVIEW

Grupo Britt has developed an expertise in finding the best products, sourcing them, and setting up quality standards that it offers to other countries.

Pablo E. Vargas
BIOGRAPHY
Pablo E. Vargas became Executive Chairman for Grupo Britt in 2018, after being Britt’s CEO for 18 years. Prior to joining Britt, Vargas worked for international private and non-profit organizations. He has taught undergraduate- and graduate-level courses in economics. He holds a BS from Universidad de Costa Rica and MS and MBA degrees from Michigan State University. He is a Fulbright Scholar, and his MS thesis was elected Thesis of the Year by Michigan State University’s Agricultural Economics Department. Vargas participates in various boards of directors and non-profits.

How would you evaluate the current state of the agribusiness sector?

Costa Rica has done a great job in terms of adding value to its agricultural-based commodities via industrial processes and customer service. The agribusiness sectors of Latin American countries are still extremely agriculture minded, and we need move away from a product-centric model and adopt more of a customer-centric focus. There are many ways to differentiate one's product and move away from the commodities side of the business and up the value chain. Costa Rica is far ahead of other Latin American coffee growers because we do not grow that much coffee in terms of total quantity, with only about 1.5% of the world's coffee production; however, we are number three in the US in terms of customer awareness, only behind Brazil and almost on par with Colombia. We grow significantly less coffee than Brazil and Colombia but have an excellent positioning in coffee drinkers' minds. As a company, we contributed to this premium image over the long term through word of mouth, taking tourists on coffee tours and having a presence in other tourism spots in the country, as we have around 50 shops in hotels, parks, and places where tourists go.

What lessons has Britt learnt in creating value-added products and supply chains?

We did this not only with coffee but also chocolates. For example, we have several shops at Guayaquil Airport in Ecuador, and since Ecuador's cocoa is renowned because of its quality, we decided to promote our Ecuadorean chocolate bars in pretty much the same way we promote coffee here, and even export those chocolate bars to many other markets. There is a traditional cultural element in our countries, where we usually take the best of our land and export it, and we want to reverse that, and leave the “export reserve" in the country for local tasting and consumption, and export some of that production as well. Another example is Peru, where we buy most of the coffee that we sell in Lima from the province of Cusco. There are coffee fields 10km away from Machu Picchu. Over 1 million tourists go to Machu Picchu; yet, most tourists don't know about this. There is a great potential to highlight our agricultural production, tradition, flavors, and colors to tourists who come close to agricultural sites. There is a great deal of untapped potential in bringing visitors to wet mills and factories and showing them the process. It gets us closer to the customer, which is the secret of value creation.

What is your plan in terms of expansion of new markets and products?

We recently completed a separation of our two clearly defined businesses: Café Britt, a manufacturer of coffee and chocolate products, and Morpho Travel Retail, the operator of shops at airports and other traveler-locations. Both the travel retail and the coffee business complement each other; however, they are managed as different businesses. We are present in Chile in six airports, for example, and those shops do not sell much coffee because travelers in Chile are not necessarily looking for coffee products. That business could work out extremely well from a financial point of view without the coffee. Each business has its own competitive advantage and business plan. Morpho's plan has to do with increasing its footprint in each of the countries we currently operate, and also in other emerging economies where tourism is growing by double digits. We are looking for medium-sized markets with exciting long-term tourism growth outlook. In terms of the coffee side of the business, it also has its own plans and CAPEX. Again, we are expanding our presence in the main countries we are in, while at the same time we continue to look for new markets. We are also exploring new chocolate products, which have become an extremely important line of business for us.