Final Presentation Nespresso
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Transcript of Final Presentation Nespresso
AGENDA
- Coffee, Value and Current Situation.
- Triple A Meaning.
- Market Players & Non Market Players.
- AAA-Celerate Program.
- Our Proposal & Examples.
- CO2 Reduction Benefits.
COFFEE, VALUE AND CURRENT SITUATION
Currently coffee that meets Nespresso’s standards represents only 1% to 2% of
the total production.
Which is challenging for the company in terms of the long term sales increasing
and the raw material securing.
With the tight production of AAA coffee, which increases the market competition,
Nespresso needs to secure the future purchase of the crops, the quality, the
quantity and the sustainability.
Nespresso is one of the leading brands to become the first corporation that obtains an almost 100% of supplies through its
sustainability program, creating enormous value for Nespresso and their high loyalty
clients segment.
The overall value chain of the AAA program is dedicated to provide
Nespresso with a MARKET ADVANTAGE comparing to their competitors, where increasing the reach of the program to more acres worldwide is a key for the
development of the program and Nespresso.
AAA Nespresso
Farm
CO2 Reduction
Water Usage Reduction
AAA Processing
Facility Water Reduction
Drying Process
Energy Efficiency
Diminish Nitrogen Volatilization
Transportation from farms
to processing facilities
Decrease in CO2
emmissions
Agricultural
Supplies
Transport
to Lousane
Decrease in
CO2
emmissions
TRIPLE A MEANING
A
• Quality: Farms that produce coffee meets Nespresso’s requirement can be part of the AAA – it helps farmers to continuously improve their quality through a better farming practices.
A
• Sustainability: The partnership with NGO’s and Rainforest through the AAA program sets rigorous environmental and social standers. This sustainability includes several criteria's such as the soil erosion, water management, biodiversity conservation, safety and working conditions.
A
• Productivity: it is a key for improving farmer’s net income. AAA tools, technical support and specific project financing contribute to addressing the yield improvement challenge together with a range of partners.
MARKET PLAYERS
• Interested in securing supply from top producers
• Build up brand image
• Return in kind from initial upfront investment
COFFEE CORPORATIONS
COFFEE TRADERS & WHOLESALERS
FARMERS
• Primary dealers and market makers
• Different integration along the supply chain
• Suffer price fluctuations and volatility
• Interested in increasing quality and yield of crop
• Lack liquidity for investments
• Tend to integrate phases in supply chain
NON MARKET PLAYERS
COFFEEASSOCIATIONS
1
GOVERNMENT2
NGOs3
CLIMATE
MITIGATION
AGREEMENTS
4
• Acquire production from farmers “garancia de compra”
• Implement logistics services and scale economies on behalf of
associates
• Promote social programs and well being of associates
• Issues market and environmental regulation
• Activates market protection measures: tax barriers, excise duties
• Assess the environmental impact of supply chain on local basis
• Promote social branding and responsibility for involved stakeholder
(e.g. “Fairtrade” label)
• Supervises implementation of Clean Development Mechanism in non-
Annex countries, according to Kyoto Protocol commitment periods
• Coordinate actions and tools to fight climate change and CO2
emissions
STAKEHOLDERS
Federations
Farmers
Producers
Governments
Nestle
NGO
Rainforest Alliance
SAN
Consumers
Suppliers
Employees
Sustainable Agriculture Network
Buyers
Traders
AAA-CELERATE PROGRAM
- Year Zero the farm will receive an initial investment.
- Since the crop of Year One and Year Two doesn't’t fulfill AAA grade for Nespresso, Farmers Could sell to Nestlé at a discounted price or the farm can sell it in the market.
- Year Three crop will be sold to Nespresso at Premiumprice.
- Farmers will increase land productivity in 10-15% approximately.
- Every new farm will be accounted for a direct decrease in the CO2 footprint and water consumption.
OUR PROPOSAL
Year 1 Year 2 Year 3Year 0
Crop 1 Crop 2
Audit Audit Audit Audit
Crop 1 Crop 2 Crop 1 Crop 2
AAA< AA< AA
Final User
Coffee Quality
Investment
Buyedproduction
Periodical Review
TWO EXAMPLES
• Upfront marketing investment of: USD 10,000
• Coffee wholesale price: USD 165 / 100lb (as of: 27/01/2015)
• Farm size: 30 Mt annual production
50 ha of land (Small Farm)
• Coffee crops being sold from the farmers to Nestlé: 3.5% over 2 years
• Upfront marketing investment of: USD 40,000
• Coffee wholesale price: USD 165 / 100lb (as of: 27/01/2015)
• Farm size: 60 Mt annual production
100 ha of land (Medium Farm)
• Coffee crops being sold from the farmers to Nestlé: 5.0% over 2 years
CO2 REDUCTION BENEFITS
World Coffee Market
2% 5%
1 Kg AAA Coffee = 1.6 kgs / CO2 1 Kg < AAA Coffee = 1.93 kgs / CO2 *
Top
Qua
lity
2% 7%
Top
Qua
lity
2% 10%
Top
Qua
lity
CO2 Reduction = 3.1%$12.8 M Euros
CO2 Reduction = 5.1%$12.6 M Euros
CO2 Reduction = 8.2%$12.2 M Euros
Scenario 1
Scenario 2
Scenario 3
TEAM ORGANIZATION
Sammary of Experience
• ExxonMobil, B2B territory manager to
west area.
Education
• Colegio de EstudiosSuperiores de Administración, BA in Business Adminstration.
Noor Al-Abdulrazzaq
Filippo
Del Grosso
Andrei
GaggionCamila Mejia
Summary of Experience
• Commercial Bank of Kuwait, FX Trader
• Gulf Bank of Kuwait, Relationship Manager, Corporate banking.
Education
• College of Basic Education, Fine Arts.
Summary of Experience
• Dell Computers, customer
service analyst. • Sykes enterprise, OMD supervisor.
Education
• Fidélitas University, Industrial Engineer.
Summary of Experience
• Energy professional. • PwC and KPMG,
consultant• Terna, Assistant projectmanager.
Education
• Bocconi University, Economics.
Discounted value of payment in kind in 2 years time
Production (Annual Output) -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% -4.5% -5.0%
10 $137 $410 $816 $1,349 $2,001 $2,764 $3,628 $4,581 $5,610 $6,702
Average Production 0.6Mt / Ha 15 $206 $616 $1,224 $2,023 $3,002 $4,147 $5,443 $6,872 $8,415 $10,053
Average Farmer 50Ha 20 $274 $821 $1,632 $2,697 $4,002 $5,529 $7,257 $9,162 $11,220 $13,404
Average Output 30Mt 25 $343 $1,026 $2,040 $3,371 $5,003 $6,911 $9,071 $11,453 $14,025 $16,755
30 $412 $1,231 $2,448 $4,046 $6,003 $8,293 $10,885 $13,743 $16,831 $20,106
Wholesale Coffe Price Arabica 1.65
USD Pound 35 $480 $1,436 $2,856 $4,720 $7,004 $9,676 $12,699 $16,034 $19,636 $23,457
Wholesale Coffe Price Arabica 3,630
USD Mt 40 $549 $1,641 $3,264 $5,394 $8,004 $11,058 $14,514 $18,325 $22,441 $26,808
45 $618 $1,847 $3,672 $6,068 $9,005 $12,440 $16,328 $20,615 $25,246 $30,159
Discount Rate 15% 50 $686 $2,052 $4,080 $6,743 $10,005 $13,822 $18,142 $22,906 $28,051 $33,510
55 $755 $2,257 $4,488 $7,417 $11,006 $15,204 $19,956 $25,196 $30,856 $36,861
60 $823 $2,462 $4,895 $8,091 $12,006 $16,587 $21,770 $27,487 $33,661 $40,212
APPENDIX I – SENSITIVITY ON PRICES