exp loring the world of coffee
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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 PresentationTRANSCRIPT
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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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