Cooks Global Foods forms JV with China’s BuBuGao Group
Cooks Global Foods (NZX.CGF) today announces it has signed a joint venture agreement with Shenzhen-listed retail and property giant BuBuGao (Better Life) Group (BBG) to develop 30 Esquires Coffee stores in the province of Hunan by 2020.
The joint venture cements China’s position as Esquires Coffee’s fastest growing territory and lifts the total number of planned stores in the country to at least 150. It also further advances Cooks’ aspiration for Esquires Coffee to be operating 800 stores around the world by 2020.
BBG has taken a 49% stake in the joint venture and will progressively contribute property in its shopping malls that are primarily based in the Hunan province. Cooks, with a 51% stake in the venture via its wholly-owned Chinese master franchisee Beijing Esquires Management Co, will develop and manage the stores.
BBG has annual revenues of nearly CNY12.3 billion, (NZ$2.7 billion). It employs over 70,000 people and operates over 373 retail outlets in the Hunan, Jiangxi, Sichuan, Chongqing, Guangxi, and Guizhou provinces, including 156 supermarkets and 29 shopping malls. It also has a CNY10 billion property portfolio and is active in online commerce and finance.
Cooks Global Foods Executive Chairman Keith Jackson said: “We are delighted to have secured BBG as a partner in the Hunan province. The agreement is further endorsement of the potential for Esquires Coffee’s artisan style Organic and Fairtrade brand to grow rapidly in Chinese markets.
“The venture is a continuation of our strategy to drive growth in China by partnering with significant domestic businesses that can provide the resources, retail expertise and local knowledge that are pre-requisites for success in the region. These capabilities, coupled with a Chinese Esquires Coffee management team that understands how to translate the brand’s unique take on New Zealand café culture into domestic settings, gives us great confidence in the potential of the business to grow.”
BBG Chairman Tian Wang said: “With demand for branded coffee growing in China at rates that outstrip growth rates in the rest of the world, Esquires Coffee will fill an important part of the retail mix across our shopping centres.
“Its Organic, Fairtrade and artisan positioning makes it an aspirational destination for a broad cross section of the population. We are confident the new venture will generate considerable value for the BuBuGao group.”
Cooks now operates 21 stores in China employing 130 people, making it the third largest Kiwi non-Government employer in the Peoples’ Republic. It is now targeting a footprint of more than 150 stores in China by 2020.
Earlier this year, Cooks acquired the Esquires Coffee Chinese master franchisee Beijing Esquires Management Co. As part of that transaction, one of the former owners, Yunnan Metropolitan Investment Company (YMCI) took a 15.75% stake in Cooks. YMCI is a company with a capital value in excess of US$800 million and has subsidiaries listed on the Shanghai Stock Exchange.
Cooks also has a similar joint venture with Jiajiayue Group (JJY) supermarket chain to develop 50 stores in the Shandong province. JJY is one of the largest companies in Shandong, employing almost 30,000 staff and operating more than 550 supermarkets.
“We continue to seek partners to expand our foot print in other regions and our management team, led by expatriate Chinese-New Zealander Ellen Zhang, is already in discussion with several other parties,” Mr Jackson said.
Cooks owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide excluding New Zealand and Australia. Following the signing of a new master franchise agreement for Egypt last week, the company is now growing in 13 separate territories around the world and it is in discussions to expand its master franchise network further.
About Cooks Global Foods:
Cooks Global Foods operates in world markets and is listed on the NZAX market operated by NZX Limited in New Zealand under the code CGF. It owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide excluding New Zealand and Australia. Esquires currently operates or franchises coffee houses in the United Kingdom, Ireland, the Middle East and China. Related businesses within the group include New Zealand-based supply companies Progressive Processors and Scarborough Fair, which supply product into both Esquires stores and other third party customers. See: www.cooksglobalfoods.com
About BuBuGao Group (Better Life)
Shenzen-listed BuBuGao Group headquartered in Xiangtan, Hunan, China, is a major retail, finance and property group. It employs 70,000 people and operates more than 400 retail stores in Hunan, Jiangxi, Sichuan, Chongqing, Guangxi, and Guizhou provinces in China, including 156 supermarkets, and 29 shopping malls. It is building 10 further Mega shopping malls, the largest of which is 1.58 million sqm, which will become a fully integrated community with office buildings, five-star hotels, shopping malls, commercial streets and residential apartments, ten times the size of New Zealand’s largest mall. It 2014 it had revenue of CNY12.3 billion with the majority of that revenue generated by its supermarkets. See: http://www.bbg.com.cn