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Processed & Packaged Goods

Processed & Packaged Goods. Starbucks Green Mountain JM Smucker Mondelez Brian Reynolds. Packaged Coffee. All 4 companies have an interest in selling coffees to consumers

jayme-ruiz
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Processed & Packaged Goods

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

  2. Packaged Coffee • All 4 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. The Supply Chain

  4. Major Players in the Industry

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

  6. Industry Definition •This industry produces coffee, typically by purchasing coffee beans and processing them into roasted or ground coffee products. The industry excludes tea production and revenue from coffee made on premises, such as in a coffeehouse or cafe. Coffee creamer production is also excluded from the industry.

  7. Primary Industry Activities Major Products and Services in Industry •Traditional ground roasted coffee •Specialized ground roasted coffee •Whole bean roasted coffee •Roasting coffee •Manufacturing coffee concentrates, including instant and freeze-dried varieties •Manufacturing coffee extracts, flavorings and syrups

  8. What really is coffee? •ARABICA The premium variety of coffee bean native to Africa, and the bean that the majority of premium coffee products are made with. •GREEN COFFEE Natural coffee beans extracted from the fruits after harvesting. •GROUND COFFEE Roasted coffee reduced to small or very small particles, depending on the end product it is being used for. •ON-PREMISE Consumption at the point-of-sale. •ORGANIC A product made from mineral and plant ingredients rather than derived chemical compounds. •PREMIUMIZATION An increasing preference toward high-end products, such as beverages.

  9. Background Information • Adopted in October 2012, Mondelez International is a spinoff of Kraft Foods Inc. Became a snack food company and a grocery focused company. • Monde = world • Delez = delicious • Mondelez's brands include Maxwell House, General Foods International Coffee, Oreo, Lu, Ritz, Chips Ahoy, Cadbury Dairy Milk, Milka, Toblerone, Trident and Hall.

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

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

  12. 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.

  13. 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.

  14. Coffee Segment: Financial Performance

  15. Problems • Restructuring Issues • Difficulty comparing to past years • Taking a different companies financials and comparing them • Could not find any form of interest income • Could have made up my small minor difference between CI and EPAT-FEAT

  16. Market Multiple Valuations • No theoretical underpinnings • Appeal lies in the simplicity of the model • MDLZ much larger in all aspects to other companies within industries. • Will investigate if this causes issues.

  17. Performance Measures

  18. NEA

  19. NEA- without Starbucks(much better)

  20. Book Value

  21. Book Value sans Starbucks

  22. EPAT

  23. EPAT sans Green Mountain

  24. Net Income

  25. Sales- most reliable metric

  26. Problems • Selection of comparable did not yield peers that are similar on profitability, growth, and/or risk. • Appear that EPAT and NEA were poor performance metrics as they were unstable over time. • Poor basis for assessing relative value • Market is inefficient • Using prices of comparable only compounds error • Not using whole industry, only 2-3 companies • Sales and Net Income appear to be most reliable. • Due to less volatility

  27. Any Questions

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