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Exploring the world of coffee A professional investor’s perspective.

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Presentation on theme: "Exploring the world of coffee A professional investor’s perspective."— Presentation transcript:

1 Exploring the world of coffee A professional investor’s perspective

2 Ron Kleist, President Loring Smart Roast, Inc. Santa Rosa, CA, USA

3 LEGAL DISCLAIMER: Ron Kleist is NOT a coffee professional, unless…

4 LEGAL DISCLAIMER: Ron Kleist is NOT a coffee professional, unless loving to drink a great cup qualifies me as such

5 Roasting Professionals Artists, not scientists – I live in California’s “wine country” and am surrounded by people with exquisite palates and a passion for great taste

6 Roasting Professionals Artists, not scientists Creating exciting new products and introducing them to their local community – Dealing with several variables including crops, seasons, consumer tastes

7 Roasting Professionals Artists, not scientists Creating exciting new products and introducing them to their local community Searching for improved tools and raw materials.

8 Personal History Sealed Air Corporation – $2.73 Billion USD Genzyme - $20.1 Billion USD Sprint - $8.47 Billion USD JDSUniphase - $2.41 Billion USD

9 Personal History Sealed Air Corporation – $2.73 Billion USD Genzyme - $20.1 Billion USD Sprint - $8.47 Billion USD JDSUniphase - $2.41 Billion USD Loring Smart Roast, Inc. - Private

10 Life Cycle Curve

11

12 What I See in Coffee Huge Market - $50++ Billion USD Beverages

13 What I See in Coffee Huge Market - $50++ Billion USD Beverages Growth – influx of new addicts (China, India)

14 What I See in Coffee Huge Market - $50++ Billion USD Beverages Growth – influx of new addicts (China, India) Proven Profit Potential

15 What I See in Coffee Huge Market - $50++ Billion USD Beverages Growth – influx of new addicts (China, India) Proven Profit Potential Ripe for Change – Starbucks 20 years ago

16 What Investors Want Growth – Big potential

17 $50 Billion of Coffee Beverages Consumed Each Year

18 6,000,000 Tons of Green Beans Converted Each Year

19 $50 Billion of Coffee Beverages Consumed Each Year 6,000,000 Tons of Green Beans Converted Each Year Nexus = Roasting

20 What Investors Want Growth – Big potential – Big margins; >50% gross margins so you can afford to invest into developing a brand

21 What Investors Want Growth Unique Answers – Intellectual property – Trade secrets

22 What Investors Want Growth Unique Answers Brand Opportunity – "The exceptional results that we reported today for our fiscal third quarter are a testament to the strength of the Starbucks brand, to the depth of the company's organizational capabilities, and to the dedication of our partners around the world," commented Troy Alstead, cfo

23 What Investors Want Growth Unique Answers Brand Opportunity Positive cash flow > profits – Difficult when bean prices jump fast – Your business ends when you cannot pay your bills

24 Hot Buttons From Bean to Cup

25 Hot Buttons Fresh-roasted – COSTCO – Whole Foods

26 Hot Buttons Fresh-roasted Precision brewing – Equipment – Education

27 Hot Buttons Fresh-roasted Precision brewing Consumer education – Evangelists – What percentage of market needs to demand a good cup of coffee for Specialty Coffee to prosper?

28 Threats Beans!! – Hunt Brothers (Silver) – Ethiopia’s Bean Soup – Global warming & reduced production

29 Threats Beans!! Credit – Buying/Leasing becoming more difficult

30 Threats Beans!! Credit California’s Cancer Concern – What happens if a warning is posted everywhere that coffee is consumed?

31 Threats Beans!! Credit California’s Cancer Concern Worker healthcare – Ergonomics, cervical cancer, poorly educated

32 Promising Signs Be, Act & Learn… Together – What you are doing here, now, will have profound benefit to you and your customers for years to come. – Politics aside, there is enormous benefit when working together

33 Promising Signs Be, Act & Learn… Together Big players educating the market – Starbucks marketing >$2 billion annually – $100 million spent by McDonalds in 2009 just for the coffee portion of their marketing

34 Promising Signs Be, Act & Learn… Together Big players educating the market Professional organizations creating standards – SCAA/SCAE raising standards for excellence – Quality and consistency go up

35 Promising Signs Be, Act & Learn… Together Big players educating the market Professional organizations creating standards Supply chain changes to meet new demands – Bean growers – Roaster equipment manufacturers – Brewing equipment manufacturers

36 Words of Wisdom Coffee has been counter-cyclical Great coffee is only in its infancy Specialization is being seen in one industry after another – Comment from Costco manager

37 Loring’s Role Get closer to the market to understand its needs; be a resource to “movers & shakers”

38 Loring’s Role Get closer to the market to understand its needs; be a resource to “movers & shakers” Continually improve our technology As beans change and consumer tastes change, can we provide you with tools that enable you to do what you want with your beans

39 Loring’s Role Get closer to the market to understand its needs; be a resource to “movers & shakers” Continually improve our technology Help reduce threats Reduce dependence on fossil fuels and therefore reduce global warming Improve yield of precious resource: coffee bean Healthcare for coffee farmers & pickers

40 Flavor-Lock Roast Process™ No tipping/scorching

41 Flavor-Lock Roast Process™ No tipping/scorching Even heating during roasting (typical air roaster) – Air flow remains unimpeded; virtually no “cookie” – Stack or drum fire virtually impossible

42 Flavor-Lock Roast Process™ No tipping/scorching Even heating during roasting (typical air roaster) Closed-Loop Atmosphere – Near-zero oxygen – Higher humidity – Reduced seasonal affect

43 Flavor-Lock Roast Process™ No tipping/scorching Even heating during roasting (typical air roaster) Closed-Loop Atmosphere Rapid cooling – Cool in less than 4 minutes

44 Free Coffee Roaster! Smoke-free

45 Free Coffee Roaster! Smoke-free Odor-free

46 Free Coffee Roaster! Smoke-free Odor-free Scorch-free

47 Free Coffee Roaster! Smoke-free Odor-free Scorch-free Risk-free (risk of fire)

48 Free Coffee Roaster! Smoke-free Odor-free Scorch-free Risk-free (risk of fire) Hassle-free (consistent results, easy to control)

49 Free Coffee Roaster! Smoke-free Odor-free Scorch-free Risk-free (risk of fire) Hassle-free (consistent results, easy to control) Cost-free (almost) – Panda

50 Tak! Tack! Takk! Dank U! Danke! Kiitos! Pakka Per!

51 I will do my best to answer any questions you have

52


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