Venezuela Marketing Coffee through Citgo Gas Stations

Philadelphia, July 30, 2008 — The chief executive officer of Citgo Petroleum Corp.
and the Venezuelan ambassador to the United States were in Brookhaven
yesterday at a Citgo gas station and convenience store just north of
the Chester city line, to launch what they hope is a lucrative new
trade relationship based, not on fuel, but on stimulants.

Venezuela is better known for oil than for coffee. But the South
American nation has decided to copy its neighbor, Colombia, and retail
its aromatic caffeinate directly to North Americans – using
Venezuelan-owned Citgo local gas stations and convenience stores as a
distribution network.

So, appreciable corporate and diplomatic firepower gathered at a
suburban gas station on a sweltering midsummer afternoon to discuss
coffee.

"This was an initiative of Venezuela's president," said Citgo CEO Alejandro Granado, who came up from Citgo headquarters in Houston for the occasion.

"He asked us two or three years ago on behalf of the cooperative coffee
growers if we could do something to benefit the market, with our
network of thousands of service stations. We said we'd look into it,
and we made it happen."

Venezuelan President Hugo Chavez
is known for his socialist policies at home and his confrontational
diplomacy abroad, much of it directed at President Bush and what Chavez
calls American imperialism.

In Brookhaven, Chavez's U.S. ambassador, Bernardo Alvarez,
was all about conciliation and co-prosperity. "It will be another way
of connecting our two peoples," he told the crowd. "We already export
oil, baseball players, and now, well, coffee."

Venezuela wants to diversify its exports so it's not so dependent on
oil, Granado said. Venezuela says it once produced almost as much
coffee as Colombia, but farm exports dropped as oil became dominant in
the last half-century. "Now, the perverse impact of oil monoculture is
being reversed by new development policies," Granado said.

That includes coming to grips with capitalist marketing. "Formerly, it
was very hard to be competitive in the U.S. market," said Alida Moreno,
president of Cafe Venezuela, a group of 3,000 growers that provided the
first seven-ton shipment of coffee to Citgo and is using the Citgo
relationship to add more growers.

Colombian coffee cooperatives already reach U.S. markets through a
chain of Juan Valdez-brand coffee bars in places such as Suburban
Station and the shops just east of City Hall.

Alvarez said Venezuela required the cooperatives to guarantee a portion
of profits to fund clinics, schools and roads in Venezuela's coffee
regions.

We'd have to go to Venezuela to know how that's working.

Former Wawa Inc. executive John Sacharok
has visited the country's Andean growing regions and the cooperatives'
refurbished roasting plant at Pampan Trujillo, and he said he was
impressed by improvements to the industry in recent years.

"They know they had great product. They just needed a vehicle for getting it to market," said Sacharok, who now heads Golden Valley Farms, the West Chester company that distributes Venezuelan coffee in the United States.

"Starbucks showed us customers are willing to pay $3 a cup," Sacharok said. Citgo's Venezuelan coffee and cappuccino starts at $1.09.

Citgo couldn't force its store operators to carry the coffee, company officials said.

"It's a good taste. That's the only reason I'm doing it," said Boris Berdichevsky, who runs the Brookhaven Citgo franchise and several others. "I think it's better than Colombian."