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Exp loring the world of coffee

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… .

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Exp loring the world of coffee

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

  2. Ron Kleist, PresidentLoring 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. Life Cycle Curve

  12. What ISee in Coffee • Huge Market - $50++ Billion USD Beverages

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

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

  15. What ISee 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. $50 Billion of Coffee Beverages Consumed Each Year 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!

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