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Keurig

Spring 1998 Keurig, Inc

Nicholas Lazaris
President/CEO
Board Member

Christophe
r Stevens
Vice
President
Sales and
Marketing

Richard
Sweeney
Vice
President,
Operations
2
and

Keurig - 1992
Ian Greenwood

K-Cup

1995

1996

Peter Dragone
MBA

: Keurig-

Keurig

Peter Dragone
(Late summer 1996)

Keurig Onstott

Nick Lazaris
Keurig
(Feb 1997).

Nick Lazaris

1997 Keurig

Office Specialists
1200
1989-1995 M.W.Carr
2000

Keurig

10

Keurig System Demo


Videoclip

11

Green Mountain Coffee Roasters

Exhibit 4
1998 Profile
: $55.8 million
: $24.6 mil
: 321
: $25.8mil
NASD symbol: GMCR
Growing net income
12

MDT 75%
K-Cup KCup

13

K-Cup

1.
2.
3.

1,000

14

*
( )*

Keurig

15

$150

16

exhibit 7

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Overall cost savings (no wastage, labor, etc)
OCS
/ )
OCS

OCS

Keurig

US$400/

US$1000/

US$0.275~0.375;
1/3

US$0.4~0.5

1-2

30min(=US$7.5)

18

19

or

20

21

22

,
&

$15

us$400~500 ,
1~2 , US$60~90

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ex: Maxwell
16 milliom ,
US$25~70
Keuring -US$100~150,

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Caf System
7

Flavia

US

M&M/Mars

US$2000~2500/

US$2500/

US$1200/

US$0.29

US$0.22

US$0.39

Filterfresh

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Filterfresh

Filterfresh
29/cup
40,000 existing
units ($2500/ea)

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Flavia
Flavia
Part of M&M/Mars (most significant competitor,
but didnt have passion)
39/cup
2000 ($1200 ea)

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Caf System 7
Caf System 7
22/cup
17,000 units
($2500 ea)

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K-cup MTS

MTS US$700K ,
US$180K , Keuring

MTS US$550K,
US$900K700K
: ,
Keurig

29

Pilgrim

Quantum

Amalgamated

US$575K

US$500K

US$525K

,
Keurig1500

Keurig
,

30

Vandelay, 1000 ,

us$789 us$825

Lakeland

Pilla

US$680/

US$700 (
)

Keurig
,

31

What happen now ?

32

Remark

keurig
http:// www.keurig.com

33

Thank You!


1- Keurig
Keurig ?
A.
B. Green Mountain

C. Keurig
D.
E.
35

:
Number of brewing units in offices = 1,937,000( exhibit 6)
Number of cups consumed per brewing unit per day = 43
( p.11)
Number of work days per year = 250
Number of cups consumed per year in offices = 20.8 billion
(product of three assumptions above)
Current average cost of cup consumed = $0.125 per cup
(Exhibit 6)
Profit to Keurig per K-cup produced = $0.04 (page 5)
Output per year for packaging line = 16.125 million K-cups
(page 11, needed to support 1,500 brewers)
Price per K-cup to office coffee distributor = $0.25
Price per K-cup to Office Manager = $0.5
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2- Nick Lazaris : MTS

3-
4-
? OCS

5-

37

Keurigs Business Model


Brewer
vandor
(Vandelay)

End users
Starbucks
$0.75~1.0

Brewers
$650825

Line Vendor
(MTS)

KEURIG

$500k~70
0k
Filter
Line

Brewer at
Office
Brewers Office Coffee ?
Kcup@ Manager
Supply
$1000
s
Distributors $0.5/EA

$0.04
Royalty per
Kcup

Kcups @
$0.25

Coffee Roaster
(Green
Mountain)

38

Vendors for Fill line


Vendors for fill
Line
MTS

Pilgrim

Quantum Industries

Amalgamated
Technologies

Mike Moore

900K?

=575K

=500k

Minnesota (1500 )

=525K

Minnesota (1500 )

39

Vendors for Brewers


Vendors
Vandelay Industries

Lakeland Instruments

Pilla Manufacturing

Wellesley

680

700

789
825

Minnesota (1500
)

New York

40

Make or Buy

41

Determining feasibility

Determining need
Methods/processes
- Analysis of components
- Break-even analysis
- Decision tree
- Total Cost of Ownership Analysis
- Sensitivity Analysis
what-if analysis:
( ) NPV(
) IRR ( )
- Cost estimation processes
Buying costs
Marking costs
42










43


( )





( )

44


know-how
( )


( )



45

Reduced Costs








46


(Communication)

Business Ethics

(Purchasing)



. .

(Production Management)
( . . )
( . . . )

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Keurig Launched in 1998

Targeted the Office Coffee Market


Since then:

28,000 brewers shipped


240,000,000 K-Cups shipped nearly
500,000/day
OCS profitable since 2000
#1 OCS single-cup system in the United States
5 roasters -6 coffee brands, 79 varieties of KCups

48

Keurig Premium Coffee Systems Our


Vision

Keurig will become


the worlds leading supplier of
portion-pack, single-cup
coffee brewing systems for
office, food service and home
use.

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