Despite the economic hardships in Argentina, there are still economic success stories. Western markets experienced a drop in equity prices in 2022 due to the increase in interest rates. In the meantime, the Argentine stock market surprisingly realized gains in the last year. In particular, one Argentine stock saw remarkable gains as its stock price more than tripled (347,76%) over the year. The stock in question concerns Havanna Holding S.A., a company in the confectionary sector with coffee chains and bakeries throughout Argentina profiting from the explosion in consumption of alfajores since the pandemic.
Argentina is the main producer of alfajores in Latin America
Havanna is the most famous brand of the immensely popular cookie on the Latin American continent named the alfajor. The consensus in Latin America is that Argentina produces the best quality of the traditional pastry made with two slightly sweet shortbread-like cookies filled with the best sweet called ‘dulce de leche’.
The country is the principal producer of alfajores which come in many different flavour varieties containing chocolate, vanilla, nuts, or fruits to meet the hungry demand. Tourists from other Latin American countries know better than to return empty-handed to family in their home countries without a box of alfajores.
Origins of the Havanna brand
Argentina was a leading immigration destination for Southern Europeans, mainly from Spain and Italy. The Havanna brand was founded in this multicultural melting pot as the founders are of Italian, Greek, and Argentine descent. The Cuban name originated from the Cuban-style restaurant owned by one of the founders named in homage to the Cuban capital. The founders decided to refurbish the restaurant into an alfajor factory as a starting point for the Havanna brand.
The newly founded company continued under the name of the former restaurant, although it remains a mystery why the extra “n” was added. Alfajores Havanna registered as a company in 1947, and the first products rolled off the production line in January 1948. The company will celebrate its 75th anniversary this year as it keeps strengthening its brand name.
Havanna is the market leader in the growing market of alfajores
The daily consumption of alfajores in Argentina for 2022 was estimated at 10,5 million, an increase of 75% compared to the previous year. The Havanna brand is the most famous and obtained a leading position with 238 branches in Argentina and an additional 232 branches mainly spread over the Latin American continent (some have even been opened in the U.S. and Spain).
The winning formula is a Starbucks-like concept with coffee cafés dominating the Buenos Aires street scene where having a cup of coffee supports the sale of its distinctive gold cajas (boxes) of alfajores. Havanna has chosen to sell its alfajores via its coffee chain instead of the more commonly used approach of selling via kiosks. This approach enables them to maintain control over the supply chain as cooled transportation is required to uphold quality standards, which kiosks often cannot fulfill.
Growth of the company reflected in the stock price
To meet the increasing demand for alfajores the company decided to raise capital in the financial markets in June 2016 to open up a new factory with a surface of 55.000 m2 and a yearly production of more than 100 million alfajores.
Havanna Holding raised $11.5 million USD in a public listing on the local market issuing 4.27 million shares equating to 10 percent of the company at 37 ARS per share with a company valuation of about $114.7 million USD. Its IPO was 2x oversubscribed with foreign investors constituting 17% of applications.
Since its IPO on the 1st of June 2016 on the Argentine stock market, the stock gained 1716,22% to a stock price of 635 ARS at the present time.
Post-pandemic alfajor consumption of tourists boosts stock price
Even though alfajor consumption remained relatively stable during the Covid-19 pandemic, post-pandemic tourism especially has given a boost to the demand for alfajores. The National Institute of Statistics and Census of Argentina (INDEC) measured a 6,4% economic growth for the Argentine economy YoY in June 2022.
The tourism sector, in particular, increased rapidly (39,2% YoY) as Argentina has become a popular holiday destination due to the attractiveness of its devalued currency. With the arrival of large amounts of tourists, the alfajor sales have taken off and lifted revenues of Havanna.
Bright future expectations despite investability issues
The company is mainly in the hands of private investors and some institutional parties. The stock is currently only traded on the local stock market as many other Argentinean companies have a double listing with American Depositary Receipts (ADRs) listed in New York.
Havanna Holding S.A. illustrates that even in difficult times, not all is bad, as there are always resourceful entrepreneurs profiting from business opportunities. As the company keeps innovating through investments in more vegan and healthier variants, foreign investors have good hopes that a listing in New York would open up the stock to a broader audience.
