Exp loring the world of coffee

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Exploring the world of coffee A professional investor’s perspective

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Exp loring the world of coffee. A professional investor’s perspective. Ron Kleist, President Loring Smart Roast, Inc. Santa Rosa, CA, USA. LEGAL DISCLAIMER: Ron Kleist is NOT a coffee professional, unless… . - PowerPoint PPT Presentation

Transcript of Exp loring the world of coffee

Page 1: Exp loring  the world of coffee

Exploring the world of coffee

A professional investor’s perspective

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Ron Kleist, PresidentLoring Smart Roast, Inc.

Santa Rosa, CA, USA

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LEGAL DISCLAIMER:Ron Kleist is NOT a coffee

professional, unless…

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LEGAL DISCLAIMER:Ron Kleist is NOT a coffee

professional, unless loving to drink a great cup qualifies me as

such

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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

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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

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Roasting Professionals

• Artists, not scientists• Creating exciting new products and

introducing them to their local community• Searching for improved tools and raw

materials.

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Personal History

• Sealed Air Corporation – $2.73 Billion USD• Genzyme - $20.1 Billion USD• Sprint - $8.47 Billion USD• JDSUniphase - $2.41 Billion USD

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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

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Life Cycle Curve

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Life Cycle Curve

StartEarly Adopters

SlumpAcceptance

0

1

2

3

4

5

6

Double-Humped

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What I See in Coffee

• Huge Market - $50++ Billion USD Beverages

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What I See in Coffee

• Huge Market - $50++ Billion USD Beverages• Growth – influx of new addicts (China, India)

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What I See in Coffee

• Huge Market - $50++ Billion USD Beverages• Growth – influx of new addicts (China, India)• Proven Profit Potential

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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

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What Investors Want• Growth– Big potential

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$50 Billion of Coffee Beverages Consumed Each Year

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$50 Billion of Coffee Beverages Consumed Each Year

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

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$50 Billion of Coffee Beverages Consumed Each Year

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

Nexus = Roasting

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What Investors Want• Growth– Big potential– Big margins; >50% gross margins so you can afford

to invest into developing a brand

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

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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

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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

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Hot Buttons

• From Bean to Cup

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Hot Buttons

• Fresh-roasted– COSTCO– Whole Foods

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Hot Buttons

• Fresh-roasted• Precision brewing– Equipment– Education

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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?

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Threats

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

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Threats

• Beans!!• Credit– Buying/Leasing becoming more difficult

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Threats

• Beans!!• Credit• California’s Cancer Concern– What happens if a warning is posted everywhere

that coffee is consumed?

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Threats

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

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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

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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

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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

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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

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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

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Loring’s Role

• Get closer to the market to understand its needs; be a resource to “movers & shakers”

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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

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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

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Flavor-Lock Roast Process™

• No tipping/scorching

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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

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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

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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

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Free Coffee Roaster!

• Smoke-free

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Free Coffee Roaster!

• Smoke-free• Odor-free

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Free Coffee Roaster!

• Smoke-free• Odor-free• Scorch-free

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Free Coffee Roaster!

• Smoke-free• Odor-free• Scorch-free• Risk-free (risk of fire)

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Free Coffee Roaster!

• Smoke-free• Odor-free• Scorch-free• Risk-free (risk of fire)• Hassle-free (consistent results, easy to control)

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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

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Tak!Tack!Takk!

Dank U!Danke!Kiitos!

Pakka Per!

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I will do my best to answer any questions you have

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