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Enron eyes entry into coffee, sugar, cocoa trade

Houston-based Enron Corp, the largest natural gas and electricity trading house in the United States, is looking to continue its expansion into industries beyond energy with a move into the cocoa, coffee and sugar businesses, industry sources said.

Enron has had conversations and interviews with members of the commodity trade in recent weeks, using a London-based recruitment firm to help them, the sources said.

"They are definitely interested in getting into the business. Enron has been looking for physical traders. They have some internal people and are looking for lieutenants with experience." said a cocoa trader.

"They are serious about softs. They have been sniffing around the marketplace for several weeks now. If they come in they will be extremely visible," according to a coffee trader who interviewed for a position.

A representative of Enron's public relations department would only say that the firm is constantly investigating different markets and opportunities.

"There is always a lot of speculation about what we (Enron) are doing," Habiba Bayi of Enron said.

Enron has been no stranger to industries outside the energy complex in recent years and has aggressively embraced the communications industry by turning broadband capacity into a commodity.

The broadband unit encompasses two distinct segments: the bandwidth intermediation business, which turns Internet bandwidth into a tradeable commodity; and the content services division, which engages in sales and transmission of Internet content.

Enron has consistently said it does not expect its broadband arm to record a profit until 2002 and instead has offered other measures of growth by which to benchmark the unit's progress.

In May 2000 Enron Corp. announced their purchase of London-based MG Plc. MG is a leading independent international metals dealing firm providing financial and marketing services to the metals industry.

In July of the same year, MG Plc bought Rudolf Wolff Group, which had a soft commodity brokerage operation to trade cocoa, coffee and sugar on the London International Financial Futures and Options Exchange.

Traders speculated about what kind of business Enron might pursue.

"Will they do huge physical business? Not likely, I expect over-the-counter options which would hurt the New York Board of Trade," said one cocoa broker.

Another trader who looked at what Enron has done when they get into a new business said, "They try to secure supply whether coal, electricity or steel. It wouldn't be too hard to stop the certified coffee stocks on the exchange."

"Stopping certified coffee is a relatively low risk trade," he added.

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