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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 2013: $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. • 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. Segment Reporting

  15. Consolidated Balance Sheet

  16. Consolidated Statement of Earnings

  17. Lets Look Closer

  18. Property, Plant, and Equipment

  19. 2012-2014 Restructuring Program

  20. Cont… • In 2012, MDLZ Board of Directors approved $1.5 billion of restructuring and related implementation costs (“2012-2014 Restructuring Program”) reflecting primarily severance, asset disposals and other manufacturing-related one-time costs. The primary objective of the restructuring and implementation activities was to ensure that both Mondelēz International and Kraft Foods Group were each set up to operate efficiently and execute on our respective business strategies upon separation and in the future.

  21. Debt and Other Borrowing Arrangements

  22. Commitments and Contingencies As we previously disclosed, on March 1, 2011, Starbucks took control of the Starbucks CPG business in grocery stores and other channels. Starbucks did so without our authorization and in what we contended was a violation and breach of our license and supply agreement with Starbucks related to the Starbucks CPG business. Following an initial decision in November 2013, on December 13, 2013, the independent arbitrator in our dispute with Starbucks issued a decision and Final Award that Kraft Foods Global, Inc. (now Kraft Foods Group), the named party in the proceeding, had proven that it was entitled to recover and that Starbucks must pay $2,764 million in total cash compensation for Starbucks’ unilateral termination of the agreement. The award included compensation for 135% of the determined fair market value of the agreement for improper termination as well as prejudgment interest of $521 million and Kraft Foods Group’s attorney’s fees, which the parties agreed would equal $15 million. Starbucks has paid all of the amount owed pursuant to the ruling. Under the Separation and Distribution Agreement between Kraft Foods Group and us, Kraft Foods Group directed the recovery awarded in the arbitration proceeding to us.

  23. Any Questions?

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