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Processed & Packaged Goods

Processed & Packaged Goods. Starbucks Green Mountain JM Smucker Mondelez International Brian Reynolds. Packaged Coffee. All four companies have an interest in selling coffees to consumers

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Processed & Packaged Goods

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  1. Processed & Packaged Goods Starbucks Green Mountain JM Smucker Mondelez International Brian Reynolds

  2. Packaged Coffee • All four companies have an interest in selling coffees to consumers • Some are players in the distribution of coffee, while others also have an interest in controlling the whole distribution channel.

  3. Major Players in Coffee Industy

  4. Similar Industries •Tea Production •Baking Mix & Prepared Food Production •Soda Production •Bottled Water Production •Juice Production •Grocery Wholesaling •Supermarkets & Grocery Stores •Convenience Stores

  5. All of the processed foods you can dream of…

  6. Spin off and Acquisitions…

  7. Revenue Sources • Biscuit category- 32% • Chocolate- 27% • Beverages- 17% • Gum and Candy- 15% • Other (Cheese and Grocery)- 9%

  8. Mondelez International Corporate Overview • Mondelez International, Inc., a global snack food company, is the new name for Kraft Foods Inc. • Revenues 2012: $35 Billion • 45% from developing markets

  9. Future Forecasts • With rising incomes, changing lifestyles, and improved distribution channels in developing countries, it is believed that Mondelez will experience future growth. • Only 20% of Mondelez’ coffee revenues come from North America. • Looks to maintain market share in mature economies while expanding market share in developing economies.

  10. Coffee Segment: Financial Performance

  11. Mondelez Coffee Segment • Over the 5 years to 2013, the coffee production segment is anticipated to decline at an annualized rate of 11.7% to $1.2 billion. • Revenue declines 13.2% in 2012, which can be attributed to the company's’ substantial debt of $10 billion from their spin-off.. • In 2012, the company underwent restructuring efforts to focus on increasing operating efficiencies. • Companies revenues are anticipated to decreased 5.4% in 2013 as the company continues to endure debt and incur costs from the lawsuit with Starbucks. • Maxwell House no longer with Mondelez but with Kraft Foods • Starbucks settles with Mondelez for 2.7B

  12. Spin-Off Hindsight • The original reason for the split was to allow Mondelez to free itself from what was perceived as a mature, slow-growth grocery business. With North America having fewer high growth prospects than international markets, especially in emerging markets, the new Kraft was expected to lag behind while Mondelez could be more nimble in taking advantage of growth opportunities around the world.

  13. Parsimonious Assumptions • Sales Growth Rate • Historical growth of 2.5% • Enterprise Profit Margin • 14% • Enterprise Asset Turnover • 1.1

  14. Using Analysts Forecasts

  15. Value Line Projections

  16. Equity Valuation using Dividend Discount Model Voeq = $32.10

  17. Equity Estimate using Residual Income Model Voeq = $50.37

  18. Solving for g

  19. Long-term Growth in Earnings/Sales

  20. Issues • Market Cap appears to be significantly lower than my estimates • Is MDLZ significantly undervalued? • Should look into finding most up to date numbers as possible.

  21. Any Questions?

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