Chargers Candy

1. Chargers Candy Team A2 Elvis Amankwah Josh Letourneau Grandon Smith Charlie Echols Tom Meaker

2. Company • Founded November 2001 • Mother/Daughter Mgmt Team • “Innovator of the Year” by Confectioner Magazine – 2002 • 2003 “Best Confection in Category” Canadian Grocer Magazine • Filmed and Featured on Food Network’s “Treats of the Trade” • 2 Products – “Chargers” and “Chili+Lime Gum”

3. Company Problems • Finances: Lack of widespread branding and rising “slotting fees” apply financial demands that the company is not in a position to currently overcome. • Distribution: Finding salespersons to represent Chargers Candy within the North America segment is difficult with only two offerings currently in product line. • Warehousing/Logistics: Rising fixed expenses due to changes in the logistical structure (primarily storage and warehouse space) have placed additional financial strains on the company. • Cost of Capital: Chargers Candy currently is pursuing additional financing, but capital markets for extremely small firms have become increasingly competitive. In addition, the cost of capital has risen steeply since 2001.

4. “Chargers” • Chargers” are red, caffeinated, chocolate covered espresso beans that are sold in a patented tin that resembles a D-cell battery. • Points of Difference: Unique Packaging and Portion Control

5. “Chargers”

6. Chargers Distribution • Cost Plus World Market • Barnes and Noble College Division • Harmon Stores • Walgreens • Planet K • Chapters Canada • Mac's Canada • 7-11 Canada • Chemical Evolution

7. Competitors • “Energy Candy” Category

8. Competitors (Cont.) • Shock-A-Lots • $1.50 Retail

9. Competitors (Cont.) • Buzz Bites • $3.99 Retail (per tin of 6 candies)

10. Competitors (Cont.) • Caribou Coffee “Reindeer Nibblers” • 1.75 oz. • Retail $2.95

11. Customers • Young Affluents in Hong Kong • Breaking consumer research within said market show that coffee appeals to “adventurous, open-minded, young, affluent, urban consumers that are more exposed to Western influences and tend to look up to Western lifestyles.” Note: Euromonitor Research

12. Customers • Another large consumer group, which influences the coffee consumption, is returnees. China has seen an influx of returnees (mainland Chinese students returning from Western countries) over the last five years. • Euromonitor says that many of these returnees have lived in Western countries for a decade and they have become accustomed to the coffee culture. Like the growing number of expats now living in China's main cities, these returnees are helping to push the high end of the coffee market in particular.

13. Young Affluents • "A consumption crazy, aspirational, driven generation, they are money-focused yet moral, school is important and success everything. Their favorite food is fast, favorite drink is soft and preferred birthday gift a mobile phone.“ Note: Synovate PAX Research

14. Young Affluents • 8 in 10 Young Asians influence family shopping for soft drinks/snacks • 3 in 4 influence the family visit for fast food • 6 in 10 influence tv channel selection during shared viewing • 62% own mobile phone • 45% own personal desktop • 50% of 12 to 24 year-olds name the Internet as the most helpful medium for product and service information over TV (32%) and newspapers (10%).

15. Young Affluents • Today's Young Asians worry about the future ahead and what being an adult may hold for them. A secure job is the number one concern about growing up for 19% of Young Asians, while 16% worry about being financially stable and 9% worry about adult responsibilities. • 18% voted world peace as the number one change they would make to the world. A further 16% are aspiring activists, wanting to change social problems like drugs and corruption. • While listening to their MP3 players (owned by 23% of respondents) you'll find Young Asians searching the web for information, emailing, downloading entertainment and interacting with their friends, and games, online.

16. External Environment • Hong Kong is an ideal market platform for doing business in Asia, especially China. • Why? – “Free port” with virtually no tariffs/duties. Strong rule of law and respect for property rights. Hong Kong partners typically know and have close links to markets in China and the rest of Asia.

17. External Environment • Open to international tourism, trade, and investment. • Population: 6.9 Million • Visitors: 20 Million • GDP Per Capita: $36,800 • GDP Growth: 8% • U.S. Exports: $13.5 Billion (11.9% of Hong Kong’s Imports)

18. External Environment • Other Strong Points of Hong Kong • World-class infrastructure • Free-flow of information • No restrictions on inward/outward investment • No foreign exchange controls • Simple, low-tax regime • World Financial Center

19. External Environment • Market Entry Strategy • A. Hong Kong agents and distributors can increase sales of U.S. products in both Hong Kong and China. • B. Hong Kong firms are eager to work with exporters. • C. Companies entering this market should understand Hong Kong’s fast-paced business climate.

20. External Environment • Trade Promotion and Advertising • Special Trade Fairs and Exhibitions (HKCEC – Hundreds of exhibitions held annually) • Advertising and other PR activities (TV daily audience is 2.25 million. Hong Kong tv also reaches neighboring Guangdong province). • Seminars • In-store Promotions • Joint Promotions