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U.S. Food Industry<br />
Profitability<br />
DRAFT October 1, 2018
<strong>Coffee</strong><br />
Ground/Beans<br />
2006<br />
24.7%<br />
Grocery 2011<br />
22.0%<br />
Avg 2006-2008<br />
19.0%<br />
19%<br />
2015<br />
16.9%<br />
2012<br />
12.3%<br />
Beverages 2012<br />
9.5%<br />
Pods<br />
13%<br />
2015<br />
16.9%<br />
Instant<br />
CST Estimated Range<br />
20% 25%<br />
30%<br />
Liquid, RTD<br />
35%<br />
Channel Dev<br />
Segment 2016<br />
41.8%
US Market Share/<br />
Rank Order<br />
Margins are generally related to the strength of the<br />
brand versus manufacturing scale: Kraft’s Maxwell<br />
House operating profit margin is estimated at 10%,<br />
with Folgers at 19%, and Peet’s at 22%, reflects this<br />
relationship<br />
1. Folgers (JM Smuckers)<br />
2. Starbucks<br />
3. Maxwell House (Heinz<br />
Kraft)<br />
4. Dunkin (JM Smucker<br />
under license)<br />
5. Peet’s<br />
• Keurig Green Mountain has a margin advantage<br />
as is the leading manufacturer of pods in the US<br />
for its own use, acts as a copacker for other<br />
brands, and also licenses brands for use in its<br />
pod business.<br />
• Globally, Nestle and its Nespresso machines is<br />
the largest coffee pod system, and is expected to<br />
make inroads in the US based on their $8 Billion<br />
arrangement with Starbucks to market and<br />
distribute the brand worldwide<br />
While not popular in the US, these products benefit<br />
from a brand umbrella in ground coffee or are a<br />
niche offering with a historically older consumer<br />
and not supported by advertising/consumer<br />
promotions, giving rise to attractive margins<br />
1. Starbucks<br />
2. Green Mountain (JAB<br />
Holdings)<br />
3. Dunkin (Smuckers)<br />
1. Folgers (JM Smuckers)<br />
2. General Foods Instant<br />
3. Maxwell House<br />
4. Yuban (Kraft Heinz)<br />
Manufacturing scale and route distribution<br />
efficiency, sourced from carbonated soda partners<br />
(e.g. Starbucks/Pepsi) are the foundation for<br />
attractive brand leverage and profits<br />
1. Starbucks<br />
2. Monster
Ground/Beans<br />
Pods<br />
Instant<br />
Liquid, RTD<br />
<strong>Coffee</strong><br />
Midpoint<br />
Estimate<br />
2006<br />
24.7%<br />
2015<br />
16.9%<br />
US Market Share/<br />
Rank Order<br />
19%<br />
Grocery 2011<br />
22.0%<br />
Avg 2006-2008<br />
19.0%<br />
2012<br />
12.3%<br />
Beverages<br />
2012<br />
9.5%<br />
1. Folgers (JM Smuckers)<br />
2. Starbucks<br />
3. Maxwell House (Heinz<br />
Kraft)<br />
4. Dunkin (JM Smucker<br />
under license)<br />
5. Peet’s<br />
Midpoint<br />
Estimate<br />
US Market Share/<br />
Rank Order<br />
13%<br />
2015<br />
16.9%<br />
1. Starbucks<br />
2. Green Mountain (JAB<br />
Holdings)<br />
3. Dunkin (Smuckers)<br />
Midpoint<br />
Estimate<br />
US Market Share/<br />
Rank Order<br />
25%<br />
CST Estimated Range<br />
20%-30%<br />
1. Folgers (JM Smuckers)<br />
2. General Foods Instant<br />
3. Maxwell House<br />
4. Yuban (Kraft Heinz)<br />
Midpoint<br />
Estimate<br />
US Market Share/<br />
Rank Order<br />
35%<br />
1. Starbucks<br />
2. Monster<br />
Channel Dev<br />
Segment 2016<br />
41.8%
Margins are generally related to the strength of the brand versus<br />
manufacturing scale: Kraft’s Maxwell House operating profit margin is<br />
estimated at 10%, with Folgers at 19%, and Peet’s at 22%, reflects this<br />
relationship<br />
• Keurig Green Mountain has a margin advantage as is<br />
the leading manufacturer of pods in the US for its<br />
own use, acts as a copacker for other brands, and<br />
also licenses brands for use in its pod business.<br />
• Globally, Nestle and its Nespresso machines is the<br />
largest coffee pod system, and is expected to make<br />
inroads in the US based on their $8 Billion<br />
arrangement with Starbucks to market and distribute<br />
the brand worldwide<br />
While not popular in the US, these products<br />
benefit from a brand umbrella in ground coffee<br />
or are a niche offering with a historically older<br />
consumer and not supported by advertising/<br />
consumer promotions, giving rise to attractive<br />
margins<br />
Manufacturing scale and route distribution<br />
efficiency, sourced from carbonated soda<br />
partners (e.g. Starbucks/Pepsi) are the<br />
foundation for attractive brand leverage and<br />
profits
Category<br />
Ground/Beans<br />
Kraft Beverages 2012 9.5%<br />
US Market Share/<br />
Rank Order<br />
Pods<br />
DE Master Blender ("DE") 2012 12.3%<br />
Green Mountain/ Keurig 2015 16.9%<br />
Midpoint Estimate 19.0%<br />
Folgers Avg 2006-2008 19.0%<br />
Peet's Grocery 2011 22.0%<br />
Eight O'Clock 2006 24.7%<br />
Midpoint Estimate 13.0%<br />
Keurig 2015 16.9%<br />
1. Folgers (JM Smuckers)<br />
2. Starbucks<br />
3. Maxwell House (Heinz Kraft)<br />
4. Dunkin (JM Smucker under<br />
license)<br />
5. Peet’s<br />
1. Starbucks<br />
2. Green Mountain (JAB Holdings)<br />
3. Dunkin (Smuckers)<br />
Instant 1. Folgers (JM Smuckers)<br />
2. General Foods Instant<br />
CST Estimated Range 20-30%<br />
3. Maxwell House<br />
Midpoint Estimate 25.0% 4. Yuban (Kraft Heinz)<br />
Liquid, RTD<br />
Midpoint Estimate 35%<br />
Starbucks Channel Dev<br />
Segment 2016<br />
41.8%<br />
1. Starbucks<br />
2. Monster
Margins are generally related to the strength of the brand versus<br />
manufacturing scale: Kraft’s Maxwell House operating profit margin is<br />
estimated at 10%, with Folgers at 19%, and Peet’s at 22%, reflects this<br />
relationship<br />
• Keurig Green Mountain has a margin advantage as is<br />
the leading manufacturer of pods in the US for its<br />
own use, acts as a copacker for other brands, and<br />
also licenses brands for use in its pod business.<br />
• Globally, Nestle and its Nespresso machines is the<br />
largest coffee pod system, and is expected to make<br />
inroads in the US based on their $8 Billion<br />
arrangement with Starbucks to market and distribute<br />
the brand worldwide<br />
While not popular in the US, these products<br />
benefit from a brand umbrella in ground coffee<br />
or are a niche offering with a historically older<br />
consumer and not supported by advertising/<br />
consumer promotions, giving rise to attractive<br />
margins<br />
Manufacturing scale and route distribution<br />
efficiency, sourced from carbonated soda<br />
partners (e.g. Starbucks/Pepsi) are the<br />
foundation for attractive brand leverage and<br />
profits
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