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Presentation on theme: "This information is confidential and was prepared by Mesoamerica solely for the use of our client; it is not to be relied on by any 3rd party without Mesoamerica's."— Presentation transcript:

1 This information is confidential and was prepared by Mesoamerica solely for the use of our client; it is not to be relied on by any 3rd party without Mesoamerica's prior written consent. Britt Travel Retail Development Café Britt Coffee Corporation Airports Conference of the Americas, St. Maarten, July

2 RJ-POAS-Avance #1 v02 2 Executive Summary Strategy Operations Conclusions Agenda

3 RJ-POAS-Avance #1 v02 3 Café Britt: Leading travel retailer with sense of place in the Americas From coffee company to travel retailer with 51 stores in airports, hotels at key tourist locations (free- standing concepts) Britt owns and manufactures its key brands in premium coffees, chocolates and specialty items, designs most of its products Integration of physical and web channels Know-how in product and store creation and execution skills Unique travel retailer Sense of place systematically developed Café Britt: Snapshot Founded: 1985 First store opening: 2001 International expansion: 2005 (Peru) Headquarters: Costa Rica Financial summary: $65M in revenues Markets: Current retail presence in Costa Rica, Peru, Chile, Curaçao and US Virgin Islands; Miami Airport stores opening soon; Foodservice/Wholesale and Direct Sales in 20 countries President & Founder: Steve Aronson CEO: Pablo E. Vargas Employees: ~860

4 RJ-POAS-Avance #1 v02 Tienda Perú Perú (Internacional) Aeropuerto Internacional Jorge Chávez, Perú

5 RJ-POAS-Avance #1 v02 Aeropuerto Intl. Hato, Curaçao Antillas Holandesas Además: Aeropuerto Jorge Merino Benítez, Santiago, Chile

6 RJ-POAS-Avance #1 v02 Tienda Tabacón Hot Springs Resort & Spa Volcán Arenal, La Fortuna, Costa Rica

7 RJ-POAS-Avance #1 v02

8 Curaçao Chile Peru Store-in-store concept Stores in key tourism locations in Costa Rica Additional airport stores in Costa Rica Online store cafebritt.com Mail order concept Coffee tour and first store Key Company milestones …1985´ 88´ 90´ 92´ 94´ 96´ 98´00´ 02´ 04´ … First airport kiosk in Costa Rica Jambo Sauces Coffee roasting Premium chocolate products

9 RJ-POAS-Avance #1 v02 Coffee roasting 9 The Company has been growing at an average of ~50% per year over the last 20 years… Café Britt has grown from a premium coffee roasting company to an international travel retailer and currently operates 36 stores in the Americas Note: Data as of June 30 th of each year Café Britt: Sales Evolution Airport retail Intl. retail

10 RJ-POAS-Avance #1 v02 10 …and currently operates 51 stores Chile Number of stores: 8 Retail space: 759 m² Retail concepts: Airport Operation highlights: The 5 stores are the Companys most recent openings US Virgin Islands Number of stores: 1 Retail space: 180 m² Retail concepts: Hotel retail Operation highlights: Located in the Marriot Frenchmans Reef Resort Curaçao Number of stores: 3 Retail space: 296 m² Retail concepts: Airport retail Operation highlights: Opened in mid-2006, the stores are extremely popular in a country historically lacking coffee culture. Peru Number of stores: 6 Retail space: 602 m² Retail concepts: Airport, hotel Operation highlights: Coffee roasting facility Costa Rica Number of stores: Retail space: 1,651 m² Retail concepts: Airport, hotel, retailer, supermarket, free-standing Operation highlights: Headquarters, coffee roasting facility, chocolate manufacturing, coffee tour Source: Café Britts Management Stores Stores and production facilities

11 RJ-POAS-Avance #1 v02 Basic value creation engines Sense-of-place based retail concepts Retail concepts celebrate the local culture of its store locations and offer the customer unique products with a local touch A multi-disciplinary team tours the target country to understand the underlying themes that attract the traveler which are then incorporated into country-specific stores An innovation and development team creates products adapted for all locations and leads the brand portfolio development Product development capacity Expanded Britt brand name into confectionery products, such as chocolate-covered coffee beans, nuts (macadamia, cashew, hazelnuts, etc) and fruits (guava, passion fruit, lucuma, etc.) The Company has developed brands in textiles (Morpho) and gourmet tropical sauces (Jambo) Constantly designing many non-branded products in the souvenir category

12 RJ-POAS-Avance #1 v02 What Café Britt includes 12 Britt has coffee and chocolate production facilities in Costa Rica and Peru, roasting more than 3 million lbs. of premium coffee and producing ~600,000 lbs. of confectionery per year Retail: Britt has 36 stores in airports, hotels, and as free-standing concepts in 5 countries, covering a total of 3,488 m² Foodservice/Wholesale channel: The Company serves more than 1,400 foodservice and wholesale clients Direct Channel: In FY sales through the website and customer contact center accounted for ~ 9% of total sales Britt has distribution centers in Costa Rica, Peru, and Miami (the latter mainly for e-commerce sales) and a network of warehouses that serve the remaining countries Most non-airport retail stores are re-stocked on a weekly basis and airport stores on a daily basis Production Distribution Channels Logistics The Britt brand is synonymous with top-quality gourmet coffee and chocolates whose reputation extends beyond the countries where Britt operates The Company is able to charge premium prices for the majority of its products Brands

13 RJ-POAS-Avance #1 v02 13 Financial Summary Sales Retail Direct Marketing (e-commerce) Foodservice/Wholesale Coffee Tour Total Sales Revenue Growth COGS Gross Margin % of Revenues SG&A & other income (expense) EBIT % of Revenues EBITDA % of Revenues 04/ % % % 05/ % % % % 06/ % % % % 07/08B % % % % 08/09F % % % % Pro-Forma Grupo Café Britt (Consolidated) Notes: 1.Fiscal year runs july 1 st through June 30 th 2.Fiscal year 07/08 includes 6 months actual (results have been above budget) + 6 months budget; fiscal year 08/09 is estimated based on stand-alone management case 3.Figures exlude green coffee business, gains and losses on future and options contracts and are adjusted for extraordinary expenses and management contract US$ millions

14 RJ-POAS-Avance #1 v02 14 Agenda Executive Summary Strategy Operations Conclusions

15 RJ-POAS-Avance #1 v02 Our Business Model Multi-channel approach 5 countries Airports as platform for country rollout Retail concepts that celebrate local culture Unique products in country-specific stores Britt brand means top-quality, gourmet, coffee, chocolate products Premium prices New product and brand development 15 Bain-Template (revised)

16 RJ-POAS-Avance #1 v02 Sourcing Green coffee Handcrafts Chocolates Other (textiles, souvenirs, etc.) Britts sources of competitive advantage Distribution channels Presence in 5 countries 3 different concepts -Retail -Direct Marketing -Foodservice/Wholesale Key strengths Intense interaction with coffee producers (training, advice) ensuring supply of high quality raw materials Long-term relationships with local handcraft designers/suppliers tailoring product development to company needs Offshore sourcing permits high margins in Other product categories Key strengths Strong in-house capabilities including product innovation, brand management and IT services with capacity to support aggressive growth targets Control over production process and product quality Experienced management team with international experience Key strengths Recognized sense-of-place concept, offering unique store design and quality destination merchandise Retention of retail customers via virtual store offering worldwide delivery Commercial alliances with foodservice clients, including managing and supervising licensed stores in supermarkets and hotels Transformation Product innovation Brand management Production Support services

17 RJ-POAS-Avance #1 v02 17 Agenda Executive Summary Strategy Operations Conclusions

18 RJ-POAS-Avance #1 v02 18 Operations -Organizational Structure -Country Profiles -Products & Brands -Distribution Channels -Operations Agenda

19 RJ-POAS-Avance #1 v02 The company is currently being re-structured towards a matrix organization CEO Commercial Director Board of Directors Costa Rica Retail Mgr Chile Country Mgr Curaçao Country Mgr Costa Rica Country Mgr Legal Dpt Mgr IT Mgr Operations Mgr CSR Mgr Costa Rica Commercial Mgr Quality Mgr Corporate Image and Design Mgr Peru Country Mgr Distrib. Center Mgr Coffee Tour Coordinator Peru Regional CFO Chile CFO St. Thomas Country Mgr Corporate Accounting Mgr Accounts Mgr Operations Mgr IT Mgr IT Mgr HR Mgr Operations Mgr Corporate Image and Design Mgr Finance Mgr Finance Mgr Logistics Mgr Food and Drinks Mgr HR Mgr Miami Distrib. Center Mgr Country Operations Corporate Support Areas Planning and Budgeting Mgr Operations Development Mgr Logistics Mgr CIO Retail Mgr Development and Innovation Mgr Retail coordinator Direct Marketing Mgr

20 RJ-POAS-Avance #1 v02 Britts store at Lima airport was awarded the Moodies 2007 Destination Merchandise Store of the Year award Perú Perú, Jorge Chávez International Airport, Perú Source: Café Britt Moodies characterized the store as a magic emporium of Peruvian products, crafts, and culture

21 RJ-POAS-Avance #1 v02 Britts e-commerce operations receives excellent reviews in independent reviews As a 2004 winner of the BizRate.com Circle of Excellence Gold Honoree Awards, Café Britt is among a select group of the best 46 on-line retailers, having met the strict criteria set by BizRate.com to recognize outstanding customer service throughout the year. BizRate praised the Company for being one of the sites that excelled at customer satisfaction with ratings above the Industry average in 7 key categories -Ease of finding desired products -On-time delivery -Overall satisfaction -Selection of products -Customer support -Product fulfillment of expectations -Customer repurchase intent. Security: Café Britt's website is regularly monitored to ensure that customers' transactions are private and secure. These third-party evaluations allow the Company to offer every customer a confident and worry-free shopping experience. Note: BizRate.com is a specialized on-line search engine designed to help on-line shoppers locate, compare and buy any kind of product. Its database includes some 40,000 stores Source: Café Britt

22 RJ-POAS-Avance #1 v02 22 Britt has developed a strong customer base that include some of the most prestigious hotels Note: Hotels listed represent only a sample of Britts client hotels Source: Café Britt Management Costa Rica: Four Seasons Resort Real InterContinental Los Sueños Marriott Ocean & Golf Resort Hotel Punta Islita Tabacón Grand Spa Peru: JW Marriott Lima Hotel Monasterio (Orient-Express Hotel) Machu Picchu Sanctuary Lodge (Orient- Express Hotel) Swissôtel Lima Libertador Hotels (Puno-Arequipa-Cuzco) Chile: Santiago Marriott Hotel Mexico: JW Marriott Cancun CasaMagna Marriott Cancun Mandarin Oriental Riviera Maya Fairmont Mayakoba Caribbean: Four Seasons Resort Bahamas Four Seasons Resort Nevis St Kitts Marriott Resort Frenchmans Reef & Morning Star Marriott, St. Thomas Hyatt Regency Trinidad CuisineArt Resort, Anguilla Rosewood Little Dix Bay, Virgin Gorda

23 RJ-POAS-Avance #1 v02 23 IT – Customer Relationships Website CafeBritt.com is an in-house developed website that is constantly updated with new sections and relevant company & product information A team of 5 people are constantly working to improve the site and convert it into a virtual store offering a broader product choice for shipping and adapting the website to reflect the different countries in which Britt operates CRM To manage Britts call center clients, the Company uses Siebel Systems, and is currently upgrading the system from version 6 to 7.1. The project is expected to be going-live in July/August this year Pocket Route In mid-2007, Britt created a solution for salespeople in the foodservice/wholesale business to improve order processing as well as client management -The routing system is based on handheld devices carried by salespersons when in-route -Order details are entered in the device and later synchronized with a central database to initiate the product dispatching -Furthermore, client data such as past orders, accounts receivables, and customer information is available on the spot -Handhelds are also able to print invoices, administer cash deposits, and maintain in route inventory.

24 RJ-POAS-Avance #1 v02 24 IT – Operating Software(1/2) Point-of-Sale Britt is currently implementing a completely new web- based point-of-sale system The system is structured into three main areas: -Cashier interface: Allows cashiers to easily capture and print customer invoices -Supervisor interface: Gives supervisors and headquarters a variety of options, including user management, pricing, offer configurations, cash management, discount management and real time sales administration -Communications: In order to reduce costs and improve access for remote stores, the system uses FTP as its main data transfer mechanism The system complies with local tax rules and thus permits paperless invoicing on.XML basis approved by Costa Rican tax authorities Export IT In the last quarter 07, Britt implemented a system to better manage its phone and internet orders The system integrates with FedEx, DHL and UPS and is able to route orders to these courier services depending on their pricing structure for the delivery service The software results in same-day dispatching and has reduced overall delivery time by up to 4 days

25 RJ-POAS-Avance #1 v02 25 IT – Operating Software(2/2) Warehouse Mgmt Software Britt maintains an in-house-developed warehouse- management system, with four main applications: -Orders: The system manages special orders for stores, such as office supplies, and new products. -Returns: Administration of damaged, expired, or discontinued products -Purchasing: The module manages the re-stocking of the warehouses; inventories are managed based on sales, not remaining stock, thus keeping constant days-of-inventory and adjusting the amount of stock according to the season. -Restocking: The module manages the re-stocking of Britts stores based on the scanned sales. A major upgrade of the system is underway and is expected to be implemented by mid-08

26 RJ-POAS-Avance #1 v02 Britt has been recognized on various occasions for its outstanding innovation, customer attention and support services 2007: Destination Merchandise Stores of the Year - Moodie Report 2007 awards Café Britt store Perú Perú as the best destination retail stores worldwide. This years award goes to the extraordinary Café Britt at Lima Jorge Chávez International Airport, a magic emporium of Peruvian products, crafts and culture. 2006: Overall Excellence Award for outstanding performance in leadership, customer service, processes, environmental, innovation & HHRR (Costa Rica's Chamber of Industries) 2005: Café Britt named third most competitive company in Latin America among the region's top : One of the 100 most admired companies in Central America (Summa Magazine) 2003: Innovation Award (Costa Rica Chamber of Commerce)

27 RJ-POAS-Avance #1 v02 The Company also enforces a stringent quality assurance process Six years ago, Café Britt began employing comprehensive management instruments based on the INTE-ISO 9001:2000 quality standard. Today Britt has integrated its management system with the inclusion of other norms such as: -ISO 14001:2004 Environmental Management Systems, with the aim of ensuring solid environmental performance in all the organizations activities -BASC (Business Alliance for Secure Commerce) to ensure effective management of the entire logistic chains security -Corporate Social Responsibility policy elements, with the purpose of transparency, anti-corruption practices, and equal development opportunities for the employees -OHSAS (Occupational Health and Safety Management Systems) elements, for the Management of Occupational Hazard Prevention. -GMP (Good Manufacturing Practices) and HACCP (Hazard Analysis and Critical Control Points) to ensure safety in all our products Source: Café Britt

28 RJ-POAS-Avance #1 v02 28 Case study: Britts management successfully entered Peru in 9 months Source: Café Britt In 2005, Café Britt won the concession for significant retail area at the Jorge Chavez International Airport in Peru The event started a new era for the Company in terms of international expansion of its travel retail and food manufacturing businesses Shortly after signing the contract for managing the stores at Limas Airport, the Company initiated a successful 9-month implementation to enter this market -A core team from several departments toured the country for several weeks to get a sense of the countrys environment and traditions -A coffee roasting facility was set up. From here several varieties of coffee (16 presentations) were launched from local sourcing -The team established relationships with local craftsmen and other local suppliers to define the countrys product base to be offered at the stores -The innovation and development department in Costa Rica worked to develop additional products with local characteristics The market entrance to Peru proved the scalability of the Companys business model and duplicability of business practices

29 RJ-POAS-Avance #1 v02 29 Britt produces and sells its branded coffee, confectionery, salsas, and textiles Confectionery Products White & Dark chocolate covered coffee beans Dark chocolate covered Lucuma Dark chocolate covered Banana Espresso Dark chocolate covered Guava Presentation Doypack 170g (6oz) Pyramid 28g (1oz) Mini-pyramid 2 units Dark Roast Tarrazú Decaffeinated Gourmet Coffee Light RoastBean: whole and ground Dark chocolate covered Pineapple Dark chocolate covered Passion fruit White & Dark chocolate covered gourmet macadamia Poás 250g and 340g bags Tres RíosTri-laminated package, freshness valve, tin tie Dark chocolate covered gourmet macadamia nuts Dark chocolate covered macadamia brittle Gourmet hot cocoa Chocolates filled with coffee liquor Category Source: Café Britt

30 RJ-POAS-Avance #1 v02 30 Britt produces and sells its branded coffee, confectionery, salsas, and textiles Textiles Products Mango chutney Tropical fruits chutney Calypso hot salsa T-shirts Presentation Individual items Caribbean jerk seasoning Mango coconut hot salsa Passion fruit hot salsa SalsasHabanero hot pepper salsaBottle 296g (10.5oz) Caps Hooded sweaters Aprons Cayenne hot pepper salsa Jalapeño hot pepper salsa Chipotle hot pepper salsa Category Source: Café Britt

31 RJ-POAS-Avance #1 v02 31 Britt also designs non-branded products and outsources their production Products SouvenirsKeychains Pins Pens Magnets Category Source: Café Britt

32 RJ-POAS-Avance #1 v02 32 Executive Summary Strategy Operations Conclusions Agenda

33 RJ-POAS-Avance #1 v02 Britt is a well positioned travel retailer with a strong focus on sense-of-place concepts and quality destination merchandise Key initiatives Enter in 3-4 new markets in the next 3 years Grow retail space at existing/new locations Penetrate foodservice/wholesale in current and new markets Leverage e-commerce capabilities Travel retail industry growing at >10% per year 1 Profitable and scalable business model with sustainable competitive advantages 2 Successful geographic expansion with concrete growth opportunities 3 Experienced management team and organizational platform 4 Forecast Source: Projections provided by Café Britts Management


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