Starbucks • Green Mountain Coffee • J.M. Smucker • Mondelez International

1. Processed and Packaged Goods Matt Moore Connor Myers Brian Reynolds Angie Zhao Starbucks •Green Mountain Coffee •J.M. Smucker • Mondelez International

2. Industry Analysis

3. Smucker’s • 50/50 between coffee and food • Stable, mature company • No exciting developments in the near future • Not comparable to Starbucks or Green Mountain • About 1/10th of the size of Mondelez

4. Starbucks • Sales: 14.9 billion, 3 times GMCR’s • Brick & mortar stores, drive-thru • A lot more well-established than GMCR • International operations

5. Mondelez

6. What about Mondelez? • Company does not have reliable time series data • No longer major player in coffee market with divestiture of Maxwell House • Restructured into a snack and biscuit/cracker company • 10 times larger than the next company in industry • Already in mature state • All future growth will be coming from emerging markets

7. 3 Other Recommendations Current Calculated Equity Buy/Hold/Sell? Share Price Value Per Share Mondelez: $35.94 $34.50 Hold Smucker: $97.46 $99.22 Hold S tarbucks: $70.93 $29.44 Sell

8. Keurig Green Mountain • Changed name as of March 2014 • Reflects that 92% of sales were from Keurig based products

9. K-cup Brands • Green Mountain Coffee • Starbucks • Dunkin’ Donuts • Caribou Coffee • Newman’s Own • Twinings • Folgers • Kirkland

10. Valuation as of 9/30

11. Prices of 9/30 • Market Price: $75.33/share • Valuation: $47.38/share • Recommend: Sell

12. Information • There is new information about company since 9/30 • Need to address information in assessing valuation as of today • SWOT Analysis

13. Strenghts

14. Strength • Convenience • Under 1 min to brew cup of coffee • No filters or coffee grounds • No wasted coffee

15. Sales Breakdown • 99.94% of Sales from North America • 75% of U.S. market share for single-cup brewers (Motley Fool)

16. Weaknesses

17. Weaknesses • K-Cups are expensive • About $.65 per cup • Cheaper to buy reusable filter for Keurig machine and bag of ground coffee • Still get convenience of Keurig machines

18. David Einhorn • Publically took massive short position • 110 slide presentation called “GAAP-uccino” • Claims “books are cooked” • SEC investigation into sales • No more data on K-Cup sales Einhorn competing in World Series of Poker

19. Sales Breakdown

20. Opportunities

21. Projected Brewer Sales

22. Projected K-cup Sales

23. Worldwide Coffee Consumption • US ranks 16th • Canada ranks 12th • Yet 99.94% of sales are from these countries • Large potential to bring Keurig to international markets

24. Keurig to UK • Partnered with Seymour Valentine, largest UK independent vending operators • Keurig machines to hit UK in 2014

25. Keurig to UK

26. International Expansion • Expansion into 12 international markets as of 2013 • Potential to expand to other markets as well

27. Product Innovation • Opportunity to increase sales in North American market • Besides Keurig K-cup, other areas to innovate

28. Brian Kelly

29. Brian Kelley • CEO of Keurig Green Mountain • Former COO of Coca-Cola • Former VP & GM of Sales for GE’s Appliance Division

30. Coca-Cola Agreement

31. YTD Graph

32. David Einhorn • Short position was “only significant loser” in portfolio for 2014 Q1. • Has “lots to say” about deal with Coca-Cola, but would “defer that discussion to another time”

33. Possible Growth Rates 2014: 20% 2015: 30% 2016: 30% 2017: 30% 2018: 30% 2019: 20% 2020: 17% 2021: 14% 2022: 11% 2023: 9% 2024: 8% 2025: 7% 2026: 6% 2027: 5% 2028: 4%

34. Valuation 2/20

35. Valuation 2/20 • Market Cap: $123.46/share • Valuation: $111.20/share • GMCR agreement with Coca-Cola changed the valuation considerable amount • Recommendation: Hold

36. Other Innovation Keurig Rivo Keurig 2.0

37. Keurig for Everything?

38. Future of Keurig Machine • Impractical to have a Keurig machine for everything • Is it possible to combine multiple Keurig machines into one? • Could Keurig machine be a new standard kitchen appliance? • Brian Kelley did work for GE’s Appliance Division

39. Threats

40. Patents Expired • Patent on K-cups expired in Sep 2012 • Opportunity for cheaper generic K-cups • However, Keurig 2.0 will only accept Keurig K-cups

41. BlackBerry Syndrome • A new company could revolutionize the market and eliminate Keurig Green Mountain • Similar to Apple/BlackBerry

42. Coffee Prices

43. Translating into Numbers • Given the current trends, how do you project data for Keurig Green Mountain? • No analyst reports projecting future sales with two new products and international emergence

44. Translating into Numbers • Bottom line, we can make a mess of it

45. Rule of 72 • If the company grows at 13%, sales will double in 5.5 years • Is 13% too optimistic? • If 8% annual growth, company would double in 9 years

46. Increase Projected Sales • Keurig hasn’t invented new machine in last few years • Releasing two new products within next couple of years • New innovation changed how we thought of company • Expanding to international markets

47. Possible Growth Rates 2014: 20% 2015: 40% 2016: 40% 2017: 40% 2018: 30% 2019: 20% 2020: 15% 2021: 12% 2022: 10% 2023: 9% 2024: 8% 2025: 7% 2026: 6% 2027: 5% 2028: 4%

49. Amount Captured

50. AEIG Model