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Britt Travel Retail Development

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1 Britt Travel Retail Development
Café Britt Coffee Corporation Airports Conference of the Americas, St. Maarten, July

2 Agenda Executive Summary Strategy Operations Conclusions

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 Tienda Perú Perú (Internacional)
Aeropuerto Internacional Jorge Chávez, Perú

5 Aeropuerto Intl. Hato, Curaçao
Antillas Holandesas Además: Aeropuerto Jorge Merino Benítez, Santiago, Chile

6 Tienda Tabacón Hot Springs Resort & Spa
Volcán Arenal, La Fortuna, Costa Rica


8 Key Company milestones
…1985 ´ 88 ´ 90 ´ 92 ´ 94 ´ 96 ´ 98 ´00 ´ 02 ´ 04 ´ 06 2008… Coffee roasting Coffee tour and first store Online store Premium chocolate products Curaçao First airport kiosk in Costa Rica Additional airport stores in Costa Rica Chile Stores in key tourism locations in Costa Rica Peru Mail order concept “Jambo” Sauces Store-in-store concept

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

10 …and currently operates 51 stores
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 US Virgin Islands Number of stores: 1 Retail space: 180 m² Retail concepts: Hotel retail Operation highlights: Located in the Marriot Frenchman’s Reef Resort Peru Number of stores: 6 Retail space: 602 m² Retail concepts: Airport, hotel Operation highlights: Coffee roasting facility 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. Chile Number of stores: 8 Retail space: 759 m² Retail concepts: Airport Operation highlights: The 5 stores are the Company’s most recent openings Stores Stores and production facilities Source: Café Britt’s Management 10

11 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 What Café Britt includes
Production 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 Distribution Channels Logistics 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 Brands 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 12

13 Financial Summary Pro-Forma Grupo Café Britt (Consolidated) 04/05
05/06 06/07 07/08B 08/09F US$ millions Sales Retail 22.1 27.8 33.5 46.1 60.1 Direct Marketing (e-commerce) 3.2 4.0 4.6 5.4 6.5 Foodservice/Wholesale 7.5 9.1 10.7 13.2 16.3 Coffee Tour 0.9 1.0 0.9 1.1 1.1 Total Sales 33.6 41.9 49.7 65.8 84.0 Revenue Growth 24.5% 18.7% 32.5% 27.6% COGS 13.8 17.2 20.2 26.4 33.2 Gross Margin 19.8 24.7 29.5 39.4 50.8 % of Revenues 58.9% 58.9% 59.3% 59.9% 60.5% SG&A & other income (expense) 14.7 18.5 22.9 28.7 35.7 EBIT 5.1 6.2 6.6 10.8 15.1 % of Revenues 15.2% 14.8% 13.2% 16.3% 18.0% EBITDA 6.1 7.4 8.3 12.6 17.3 % of Revenues 18.2% 17.7% 16.6% 19.1% 20.5% Notes: Fiscal year runs july 1st through June 30th 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 Figures exlude green coffee business, gains and losses on future and options contracts and are adjusted for extraordinary expenses and management contract

14 Agenda Executive Summary Strategy Operations Conclusions

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

16 Britt’s sources of competitive advantage
Sourcing Green coffee Handcrafts Chocolates Other (textiles, souvenirs, etc.) Transformation Product innovation Brand management Production Support services 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

17 Agenda Executive Summary Strategy Operations Conclusions

18 Agenda Operations Organizational Structure Country Profiles
Products & Brands Distribution Channels

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

20 Britt’s store at Lima airport was awarded the Moodie’s 2007 “Destination Merchandise Store of the Year” award Moodie’s characterized the store as “a magic emporium of Peruvian products, crafts, and culture Perú Perú, Jorge Chávez International Airport, Perú Source: Café Britt

21 Britt’s e-commerce operations receives excellent reviews in independent reviews
As a 2004 winner of the 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 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: 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 Britt has developed a strong customer base that include some of the most prestigious hotels
Mexico: JW Marriott Cancun CasaMagna Marriott Cancun Mandarin Oriental Riviera Maya Fairmont Mayakoba Costa Rica: Four Season’s Resort Real InterContinental Los Sueños Marriott Ocean & Golf Resort Hotel Punta Islita Tabacón Grand Spa Caribbean: Four Seasons Resort Bahamas Four Seasons Resort Nevis St Kitts Marriott Resort Frenchman’s Reef & Morning Star Marriott, St. Thomas Hyatt Regency Trinidad CuisineArt Resort, Anguilla Rosewood Little Dix Bay, Virgin Gorda 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 Note: Hotels listed represent only a sample of Britt’s client hotels Source: Café Britt Management 22

23 IT – Customer Relationships
Website 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 Britt’s 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 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 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 Export IT

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 Britt’s stores based on the scanned sales. A major upgrade of the system is underway and is expected to be implemented by mid-08

26 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 year’s 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 100 2004: One of the 100 most admired companies in Central America (Summa Magazine) 2003: Innovation Award (Costa Rica Chamber of Commerce)

27 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 organization’s activities BASC (Business Alliance for Secure Commerce) to ensure effective management of the entire logistic chain’s 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 Case study: Britt’s management successfully entered Peru in 9 months
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 Lima’s 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 country’s 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 country’s 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 Company’s business model and duplicability of business practices Source: Café Britt 28

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

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

31 Britt also designs non-branded products and outsources their production
Category Products Souvenirs Keychains Pins Pens Magnets Source: Café Britt 31

32 Agenda Executive Summary Strategy Operations Conclusions

33 Britt is a well positioned travel retailer with a strong focus on sense-of-place concepts and quality destination merchandise 1 Travel retail industry growing at >10% per year 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 Forecast 2 Profitable and scalable business model with sustainable competitive advantages 3 Successful geographic expansion with concrete growth opportunities 4 Experienced management team and organizational platform Source: Projections provided by Café Britt’s Management

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