Investor Presentation Regarding Strauss Coffee · This presentation may include forward‐looking...
Transcript of Investor Presentation Regarding Strauss Coffee · This presentation may include forward‐looking...
Investor Presentation Regarding
StraussCoffeeMay 2nd, 2013
Todd Morgan, CEO Strauss Coffee
Disclaimer
2
מצגת זו ". הצעה לציבור"ובפרט אינה מהווה ")החברה("מ "בע גרופהמצגת אינה מהווה הצעה להשקעה או לרכישת ניירות ערך של שטראוס . אינה מתיימרת להקיף או להכיל את כל המידע העשוי להיות רלבנטי לצורך קבלת החלטה כלשהי בנוגע להשקעה בניירות ערך של החברה
לשם תמצית ונוחות ואינה ממצה את מלוא הנתונים אודות החברה ופעילותה ואינה מחליפה את הצורך לעיין , מצגת זו נערכה בעיקרהואין , המידע הכלול במצגת זו אינו שלם וכל האמור בה כפוף לאמור בדיווחים הרלבנטיים של החברה. בדיווחים שפרסמה החברה לציבור
מצגת זו עשויה לכלול מידע צופה פני עתיד . לרבות לא לשלמות או דיוק המידע האמור בה, לראות במצגת זו משום מצג או התחייבותהרי שהן בלתי , אשר על אף שהחברה סבורה שהנן סבירות, המבוסס על הערכות והנחות עדכניות של הנהלת החברה נכון למועד המצגת
וכן , מגורמי סיכון המאפיינים את פעילות החברה, בין היתר, התממשותו או אי התממשותו של המידע צופה פני עתיד תושפע. ודאיות מטבעןמההתפתחויות בסביבה הכלכלית ובגורמים חיצוניים המשפיעים על פעילות החברה ושלא ניתן להעריכם מראש והם אינם מצויים בשליטת
.החברה אינה מתחייבת לעדכן או לשנות תחזית או הערכה כאמור ואינה מתחייבת לעדכן מצגת זו. החברה
This presentation does not constitute an offer for investment or an invitation to purchase or subscribe for any securities of StraussGroup Ltd. (the "Company"). In particular, this presentation does not constitute a "public offering". This presentation does not purport to be all‐inclusive or to contain all information that may be relevant in making any decision concerning an investment in the securities of the Company. This presentation was prepared primarily as a summary for your convenience only and does not reflect all data on the Company and its activity, and it does not replace the need to review the Company's public reports. The information contained in this presentation is incomplete, and everything contained herein is subject to the contents of the Company’s relevant reports and should not be considered a representation or guarantee, including for the completeness or accuracy of the information contained herein.This presentation may include forward‐looking information that is based on estimates and assumptions by Company management as at the date of its preparation, which, although the Company believes are reasonable, are by nature uncertain. The realization or non‐realization of such forward‐looking information is influenced, inter alia, by the risk factors that are typical of the Company's activity, and by developments in the economic environment and in external factors influencing the Company's activity, which cannot be assessed in advance and are beyond the Company's control. The Company disclaims any intention or obligation to update or revise any such forward‐looking statements or estimates and makes no commitment to update this presentation.
3.3 3.6
0.9
1.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2007 2012
Instant R&G
31.2
47.5
19.1
28.3
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2007 2012
Instant R&G
Global coffee market size(value and volume)
Source: Euromonitor 2012. Excluding cafes. 3
Volume (MT, mm)
4.1
4.7
Global coffee market is large and growing
Retail Selling Price (RSP) (USD $, Bn)
50.4
75.8
6.2%
7.2%
7.5%
7.6%
7.8%
8.2%
9.2%
12.5%
21.1%
26.9%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Poland
Colombia
Saudi Arabia
Serbia
Romania
Algeria
Indonesia
Brazil
Russia
Venezuela
Source: Euromonitor 2012. 4
Top ten emerging R&G markets:’07-’12 value CAGR and market size ($ mm)
848
684
303
308
261
570
351
5,442
888
326
0 1,000 2,000 3,000 4,000 5,000 6,000
Poland
Colombia
Saudi Arabia
Serbia
Romania
Algeria
Indonesia
Brazil
Russia
Venezuela SCBV presence
Brazil is by far the largest R&G emerging market
R&G consumption in emerging markets showed healthy growth
Source: Euromonitor 2012. 5
7.5%
8.6%
9.4%
10.0%
10.1%
10.7%
12.0%
13.2%
13.7%
16.5%
0.0% 5.0% 10.0% 15.0% 20.0%
Poland
Brazil
South Korea
Malaysia
Mexico
Philippines
Thailand
Russia
China
Ukraine
708
935
1,329
400
920
716
970
2,840
1,093
965
0 500 1,000 1,500 2,000 2,500 3,000
Poland
Brazil
South Korea
Malaysia
Mexico
Philippines
Thailand
Russia
China
Ukraine
Russia is by far the largest
instant emerging market
Strong growth in instant as well
Top ten emerging instant markets:’07-’12 value CAGR and market size ($ mm)
SCBV presence
6
Three key drivers of future demand in emerging markets
Premiumization
Emerging caféculture in key
Countries
Rising incomes& middle class
Growth
Significant volume growth in emerging markets
Evolution of global coffee consumption(000 bags)
7
(10,000)
10,000
30,000
50,000
70,000
90,000
110,000
130,000
150,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: International Coffee Organization (ICO) and Strauss Group estimates.
Resilient market - Volume decline risk is relatively limited
28.8%
7.4%
6.3%
8.1%
8.5%
17.4%
3.9%
1.1%
5.1%
4.7%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
SinglePortionR&G
FreshCoffeeBeans
R&G
Instant
Total
Volume '07-'12 CAGR Value '07-'12 CAGR
Coffee segments developmentHistorical value and volume ’07-’12 CAGRs by coffee category
Source: Euromonitor 2012. 8
Value:$8.0 Bn
Value: $34.1 Bn
Value: $28.3Bn
Value:$5.4 Bn
Value: $75.8 Bn
Total R&G value: $47.5 Bn
Good historic growth in all segments
Coffee segments projectionsProjected value and volume ’12-’17E CAGRs by coffee category
Source: Euromonitor 2012. 9
Total R&G projected volume
CAGR: 1.7%;Total R&G
projected value CAGR: 4.2%,
10.8%
4.1%
2.3%
3.9%
4.1%
8.0%
3.2%
1.2%
3.9%
2.3%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
SinglePortionR&G
FreshCoffeeBeans
R&G
Instant
Total
Volume '12-'17 CAGR Value '12-'17 CAGR
Solid growth projected to continue across segments
Source: Deutsche Bank research report dated September 3rd, 2012; and Morgan Stanley research report dated August 21st, 2012. 10
Global Coffee Peers:Estimated coffee EBIT margins
Potential for high profitability
0%
5%
10%
15%
20%
25%
30%
35%
40%
Nespresso NestleCoffee
Peet's Kraft's Coffeebiz
GreenMountain
Lavazza DEMB Tchibo
EBIT margin median: 15%
$1,969
$1,540
$1,294 $1,374
$1,810$1,970 $2,185
$2,596
$2,074
$2,374
$1,810
$2,056$2,241
$2,099
$2,040$1,908
$2,163
$2,053
$2,556
$2,535
$2,428
$3,073$3,246
$3,526
$4,569
$5,302
$5,172
$6,049
$6,611
$5,444
$6,388
$5,092
$5,591
$4,801
$5,063
$4,465
$3,933
$3,437
$4,077
$3,568
$3,986
$3,560
$3,254
$3,168
$3,340
$3,012
$3,009
116 ct/lb
110 ct/lb
139 ct/lb147 ct/lb
166 ct/lb
207 ct/lb
241 ct/lb
235 ct/lb
274 ct/lb
300 ct/lb
247 ct/lb
290 ct/lb
231 ct/lb
254 ct/lb
218 ct/lb
230 ct/lb
204 ct/lb
178 ct/lb
156 ct/lb
185 ct/lb
162 ct/lb
181 ct/lb
161 ct/lb
148 ct/lb
144 ct/lb
152 ct/lb
137 ct/lb
136 ct/lb
01/09 03/09 05/09 07/09 09/09 11/09 01/10 03/10 05/10 07/10 09/10 11/10 01/11 03/11 05/11 07/11 09/11 11/11 01/12 03/12 05/12 07/12 09/12 11/12 01/13 03/13
Based on 2 months forward deals
Arabica and Robusta prices($/Ton; for Arabica also ct./lb.)
11
Robusta3/28/13: $2,053
Arabica3/28/13:$3,009
Arabica down from extreme highs; Robusta more flat
Robusta1/15/09: $1,969
Arabica1/15/09:$2,556
DEMB – Underlying EBIT margins evolution (1)
12
16.0%
13.6%
11.7%
13.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
FY 2010 FY 2011 FY 2012 YTD FY 2013
D.E Master Blenders
Source: Company's public fillings and GS research report dated Sep 3, 2012.(1) Note: DEMB FY ends in June/July; YTD 2013 represents 6 months ending December 31st, 2012.
Margin recovery
22.6%
12.3%
5.7%
3.3% 2.6% 2.4% 2.1% 1.9% 1.6% 1.4%
The Global Coffee Competitive Landscape2012 RSP sales ($Bn) and value market share
13Source: Euromonitor 2012 – company shares by brand owner. Based on RSP excluding cafes/ coffee shops.
Global coffee market = $75.8Bn; Strauss is the 4th largest global coffee player
17.1 Bn 9.3 Bn 4.3 Bn 2.5 Bn 1.9 Bn 1.8 Bn 1.6 Bn 1.4 Bn 1.2 Bn 1.1 Bn
Strauss global RSP sales and market share includes 100% of Tres Coracoes (3C), a 50%‐50% partnership between
Strauss Group and Sao Miguel
10.1%
7.8%
6.5%
4.1%
3.8%
67.7%
49.6%
15.9%
2.2%2.1%1.9%
28.3%
Global Coffee Competitive Landscape -2012 value market shares for R&G and instant
Source: Euromonitor 2012.
R&G$47.5Bn
Instant$28.3Bn
Top 3 players ~ 24% Top 3 players ~ 68%
Others
Others
14
R&G local and fragmented; Instant more consolidated
Strauss Coffee B.V. (SCBV)
15
How do we compete?
16
Leadership and talent
Brand equity
Managing a distinctive brand and product portfolio
Deal making and partnerships
Operational excellence
Flexibility and speed
Innovation
SCBV organizational model
17
CMOGennady Jilinksi
GM Coffee IsraelNadav
Arens-Arad
CHROMatty Harary
GM SCEMarius
MelesteuCFO
Amir Levin
Finance
Business dev.
75% 25%
50%
JV with
Governance through 3C BOD
CTC
Consumer knowledge
Legal counsel
GM RomaniaMarius
Melesteu
GM AdriaticMihailo Stanisic
Supply chain Jacek Guner
Green coffeeProcurementPaul Borgers
Strategy
SP/AFH
CEOTodd Morgan
GM CISDaniel Ironi
SCBV BOD
GM PolandKrzysztof Klimczak
Strong central leadership with experienced local management teams
Brazil
#1
Poland
#2
CIS
NA
Romania
#2
Israel
#1
Serbia
#2Ranking R&G
#3 ---NA #3#1 ---Ranking Instant
18
SCBV footprint
20.2% 12.8%NA 22.1%64.8% 30.4%2012 total volume market shares
Source: Nielsen 2012; Storenext 2012 in Israel.
Strong player in key emerging markets; leader in Israel
Top ten global coffee markets, by value$USD mm
19
10,652
6,378 5,834
5,471
3,729 3,579
2,373 1,791 1,597 1,556
0
2,000
4,000
6,000
8,000
10,000
12,000
U.S. Brazil Germany Japan Russia France Italy UnitedKingdom
Canada Poland
SCBV is present in three of the top ten largest coffee markets
Source: Euromonitor 2012.
SCBV presence
Israel70817%
Brazil177842%
CIS84420%
Poland40710%
Romania2576%
Serbia2125%
SCBV 2012 sales, by geography
2012 Sales: NIS 4.2Bn
20
Geographically diversified portfolio
Figures represent SCBV 50% share in 3C JV.
Organic growth, M&A and Partnerships
21
2008 - 20122008 - 2012
2000 - 20072000 - 2007
1992 - 19991992 - 1999
1958 - 19901958 - 1990
Building the home base -Israel
Building the home base -Israel
Initial Expansion to Eastern Europe1992 Poland
1994 Romania
1995 Russia
Initial Expansion to Eastern Europe1992 Poland
1994 Romania
1995 Russia
CEE growth and entry to Brazil2000 Brazil 3C
2000 Ukraine
2002 Serbia Doncafé
2004 Poland
2005 Poland MKCafé
2005 BrazilJ.V. with Santa Clara2007 Russia Totti
CEE growth and entry to Brazil2000 Brazil 3C
2000 Ukraine
2002 Serbia Doncafé
2004 Poland
2005 Poland MKCafé
2005 BrazilJ.V. with Santa Clara2007 Russia Totti
Strauss/TPG deal and further growth 2008 Russia CK
2009 Brazil Frisco,
Leticia
2010 Russia Le Cafe
2011 Brazil Fino Grão
2011 Russia Ambassador
2012 Germany NDKW
Strauss/TPG deal and further growth 2008 Russia CK
2009 Brazil Frisco,
Leticia
2010 Russia Le Cafe
2011 Brazil Fino Grão
2011 Russia Ambassador
2012 Germany NDKW
Focused growth in Developing Markets
‘Best-in-class’ operating capabilities
22
Total production capacity: ~300,000 MT
GC procurement – Switzerland, Vietnam and Brazil
9 R&G factories
2 Instant plants
2 facilities for other products
HQ – Amsterdam Amsterdam,The NetherlandsSCBV Head Office
Zug, SwitzerlandProcurement Centre
Poznan, PolandR&G
Belgrade, SerbiaR&G
Strunino, RussiaR&G and Instant Packing
Bucharest, RomaniaR&G, Instant Packing andMixes Packing
HCMC, Vietnam Procurement Office
NDKW, GermanyFreeze Dried Production
Eusébio, BrazilR&G
Natal, Brazil R&G
Belo Horizonte, BrazilR&G
Rio de Janeiro, Brazil Filter paper
Manhuacu & Varginha, BrazilGreen Coffee Processing
Mossoro, BrazilPowder juices and corn products
Zfat, IsraelInstant Production Lod, Israel
R&G
Brand portfolio
23
EconomyMainstreamPremium
Israel
Poland
Romania
Serbia
CIS
Brazil
Power brands
Diversified portfolio, based on strong local brands
139 153
162
201
173
156 168
194
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012
+15.5%
+7.7%
Evolution of advertising and promotion (A&P) spend(NIS mm)
24
Driving investments in brands
Source: Company’s public fillings.Figures represent SCBV 50% share in 3C JV.
Development of SCBV sales and EBIT (NIS mm)
25
2,344 2,897 3,243 3,349 3,386
3,926 4,206
0
1,000
2,000
3,000
4,000
5,000
2006 2007 2008 2009 2010 2011 2012
Sales
192 231 255 270 257 260
312
0
100
200
300
400
2006 2007 2008 2009 2010 2011 2012
EBIT
Strong, consistent growth
Source: Company’s public fillings.Figures represent SCBV 50% share in 3C JV.
8.2% 8.0% 7.9% 8.1%7.6%
6.6%
7.4%
8.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2006 2007 2008 2009 2010 2011 2012 Q4 2012
Source: Company’s public fillings.Figures represent SCBV 50% share in 3C JV. 26
Development of SCBV EBIT margins
Margin recovery
Brazil: Tres Coracoes
27
28
50% 50%
CEOPedro Lima
3C BOD
Strong local partner and experienced management team
3C organizational structure
Real, Trillion / year
Source: McKinsey 29
Top eight projected consumer markets by 2020
20.4
10.9
7
4.43.5 3.2 3 2.8
0
5
10
15
20
25
USA China Japan Germany Brazil France England Italy
Brazil is expected to become the fifth largest consumer market by 2020
Source: FGV 30
Evolution of Brazil’s classes, by per capita income
E, 28%E, 13% E, 9%
D, 27%
D, 20%D, 16%
C38%
C55% C
60%
A, B, 7% A, B, 12% A, B, 15%
0%
20%
40%
60%
80%
100%
120%
2003 2011 2014E
A, B C D E
Per capita income (Real)Class E 0 - 751Class D 751 - 1.200Class C 1.200 - 5.174Class B 5.174 - 6.745Class A > 6.745
Brazil’s middle class is continuing to emerge
84 53 80 107 165
605
946 1,025
1,137
1,388
1,708 1,778
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Tres Coracoes – Sales50% as consolidated by Strauss, NIS mm
Corporate Rebranding
Penetration of Sao Paulo
50/50 partnership with Santa Clara
Brazil entry
31
Strong growth
Source: Company’s public fillings.Starting in 2006 and thereafter, figures represent SCBV 50% share in 3C JV.
Brazil R&G volume market share
Source: Nielsen 2012
14.7% 16.3% 19.1% 20.3% 20.4%
21.0% 19.8%21.1% 20.9% 19.9%
7.2% 8.0%8.1% 8.3% 7.3%
57.1% 55.9% 51.7% 50.5% 52.4%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2008 2009 2010 2011 2012
Other players
32
Market still fragmented
Evolution of Tres Coracoes percentage of SCBV coffee sales (1)
33Source: Strauss Group public fillings.(1) 3C 50% share as consolidated by Strauss Group / Coffee sales (inc. SCBV 50% share in 3C JV).
26%
33% 32%
34%
41%
44%42%
25%
27%
29%
31%
33%
35%
37%
39%
41%
43%
45%
2006 2007 2008 2009 2010 2011 2012
Increasing contribution to SCBV sales
2012 Top three players volume market share, by major regions in Brazil (1)
34
41.4% 24.8% 40.2%49.4%
19.6%
15.3%
10.3%
26.2%17.3%
6.2%
10.0%
3.1%
11.6% 10.5%
6.2%
33.3%
61.7%
22.0% 22.8%
68.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
North East Minas Gerais, EspiritoSanto, Interior Rio de
Janeiro
Grand Rio de Janeiro Grand São Paulo Interior São Paulo
Source: Nielson 2012. Excluding the following regions: Sul (3C market share: 8.9%; #3); Central West (3C market share: 8.2%; #3); North (3C market share: 38.1%, #1).
All other
players
#3
#2
#1
Good leadership positions, still potential for growth
CIS (Russia and Ukraine)
35
435 487 477 608 756
1,696 1,796 1,688
1,952 2,084
530 468 629
712
658
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012
Other R&G Instant
International coffee sales splitNIS mm
’08-’12 R&G CAGR: 5.3%
’08-’12 Other(1)
CAGR: 5.6%
’08-’12 Instant CAGR: 14.8%
36Source: Strauss Group public fillings.Note: Figures represent SCBV 50% share in 3C JV(1) Other includes primarily green coffee, drink powder (Frsico), and corn and corn products.
Instant is SCBV fastest growing category
207 214
458
543 543
695
844
0
100
200
300
400
500
600
700
800
900
2006 2007 2008 2009 2010 2011 2012
Strauss CIS – SalesNIS mm
April ‘08: $93mm Nov ‘10: $43mm
July ‘11: $11mm
Rebranding
37
Jan ’13:Bought the remaining 49% in Le
Caféfor $13mm
Strong track record of organic growth and acquisitions
Brand portfolio
38
Non
-cof
fee
cate
gorie
sC
offe
e br
ands
Differentiated and distinctive brands
39
Enhanced R&G production capabilities Dedicated freeze dried facility
Strunino NDKW
Operating platform enhancement
Built in 2009, located in Upahl, Germany, 100 km
east of Hamburg, with ~120 full time employees
Plant continues to meet productivity targets
Reduction of freeze dried material cost of sales
R&G plant built in 2012
Instant packing
Strong platform to drive unit cost reduction
Israel
40
Strategy 360°
41
Traditional retail market: R&G, Instant, Espresso,
Powders
Coffee at WP, OCS
Hotels, Institutions
Coffee Shops, Café Elite Chain
OTG‐ Impulse at purchase place: RTD
Direct Sale channel: ESP
Single Portion - Israel
42
Launched Single Portion capsules in Israel in December 2012
Taste adapted to the preferences of the Israeli consumer profile
Distributed by selected chains in the organized market and selected POS in Café Elite
Value add and product development
Q&A
43