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| 8-K - CURRENT REPORT - COFFEE HOLDING CO INC | jva_8k.htm |
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Coffee Holding Co., Inc.
NASDAQ:JVA
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Safe Harbor Statement
This presentation contains certain forward-looking statements. Additional written and oral forward-looking
statements may be made by the Company from time to time in Securities and Exchange Commission (SEC)
filings and otherwise. The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-
looking statements. These statements may be identified by the use of forward-looking words or phrases
including, but not limited to, “anticipate”, “believe”, “expect”, “project”, “intend”, “may”, “planned”,
“potential”, “should”, “will” or “would”. The Company cautions readers that results predicted by forward-
looking statements, including, without limitation, those relating to the Company’s future business
prospects, revenues, working capital, liquidity, capital needs, order backlog, interest costs and income are
subject to certain risks and uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements.
statements may be made by the Company from time to time in Securities and Exchange Commission (SEC)
filings and otherwise. The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-
looking statements. These statements may be identified by the use of forward-looking words or phrases
including, but not limited to, “anticipate”, “believe”, “expect”, “project”, “intend”, “may”, “planned”,
“potential”, “should”, “will” or “would”. The Company cautions readers that results predicted by forward-
looking statements, including, without limitation, those relating to the Company’s future business
prospects, revenues, working capital, liquidity, capital needs, order backlog, interest costs and income are
subject to certain risks and uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements.
Specific risks and uncertainties include, but are not limited to those set forth under Item 1A, “Risk Factors”, of
the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the
SEC. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a
result of new information, future events or otherwise.
the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the
SEC. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a
result of new information, future events or otherwise.
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Company Snapshot
• Family Operated Business - 35+ years
• May 2005 IPO (AMEX:JVA - $5.00)
• Moved to NASDAQ - March 16, 2010
• Only horizontally integrated company in the industry
• Core Business -Private Label Coffee, Branded Coffee and
Specialty Green Coffee
Specialty Green Coffee
• “ONE STOP SHOP” for our customer’s coffee requirements
• 10/31/11 sales - $146.7 Million
¹
(1) For the year ended October 31, 2011
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Key Statistics
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Market Statistics
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|||
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Stock Price 2/27/2012
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$ 8.05
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Shares Outstanding (Diluted)
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6.4
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52 Week High
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$ 30.98
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Market Capitalization (Diluted)
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$ 51.5
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52 Week Low
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$ 3.90
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Plus Debt¹
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$ 1.8
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Avg. Daily Volume (3 mo.)
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327,390
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Less Cash¹
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$ 4.2
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Shares Outstanding (Basic)
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6.4
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Enterprise Value
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$ 49.1
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Ownership %²
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David Gordon, EVP Operations
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14.8 %
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Andrew Gordon, CEO
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14.0
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Bridgeway Capital Management
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3.1
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Oxford Asset Management
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1.6
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Morgan Stanley
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0.7
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Dimensional Fund
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0.7
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D.E. Shaw
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0.6
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LTM Stock Price and Volume
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(1) As of October 31, 2011
(2) Source: Thomson One
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Our key management team has over 50 years experience in
the coffee industry
the coffee industry
Andrew Gordon, President and CEO
Employed by Coffee Holding for over 26 years
Procures all green coffee and trades the commodity market on a daily basis
Oversees both the branded and private label sales areas
David Gordon, Executive Vice President
Employed by Coffee Holding for over 28 years
Main contact with GMCR
Travels extensively to origin (Central and South America)
Founding member of SCAA (Specialty Coffee Association of America)
Head of CHC Quality Control
Experienced Management Team
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Investment Highlights
• National distribution with platform for growth
• Positioned to profitably grow through varying cycles of the coffee
market
market
• Favorable industry trends
• Strong customers and alliances
• Diverse portfolio of branded coffees
• Significant revenue and income growth
• Strong balance sheet
• Experienced management team
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Overview
Coffee Holding Company is one of the leading manufacturers
of private label coffee in the U.S. We pack for wholesalers and
retailers located throughout the Continental U.S., Canada and
Pacific Rim. We have grown our customer base for over forty
(40) years and enjoy the reputation for being both quality and
service oriented. Our focus as a private label coffee roaster is to
give our customers the best available beans at a reasonable cost
to ensure them a quality product in both taste and price which
will build business and develop a dedicated loyal customer base.
of private label coffee in the U.S. We pack for wholesalers and
retailers located throughout the Continental U.S., Canada and
Pacific Rim. We have grown our customer base for over forty
(40) years and enjoy the reputation for being both quality and
service oriented. Our focus as a private label coffee roaster is to
give our customers the best available beans at a reasonable cost
to ensure them a quality product in both taste and price which
will build business and develop a dedicated loyal customer base.
Strong Industry Growth
8
U.S. Coffee Imports Continue Upward Path¹
(Billion $)
What Makes Us Different?
CHC is one of the few coffee companies offering a
broad array of coffee and teas across the entire
spectrum of consumer tastes, price points,
product types and distribution channels
broad array of coffee and teas across the entire
spectrum of consumer tastes, price points,
product types and distribution channels
Our horizontal integration allows CHC to do well
under varying economic conditions and market
trends (demand for coffee relatively inelastic:
amounts consumed don’t change, only
consumption patterns change)
under varying economic conditions and market
trends (demand for coffee relatively inelastic:
amounts consumed don’t change, only
consumption patterns change)
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Full Suite Of Products
Retail branded coffee
Mainstream retail private label coffee
Specialty retail coffees both private label and branded
Wholesale specialty green and gourmet whole bean coffees
Food service
Instant coffees
Niche products
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CHC Customer Advantage
CHC has the capability to roast, grind & pack coffee in
can/brick pack. Have capability to pack whole
bean/ground coffee in valve bags
can/brick pack. Have capability to pack whole
bean/ground coffee in valve bags
We are also certified ORGANIC/ FAIR TRADE
We can provide a agglomerated, crystal, organic
instant coffees packed in glass/plastic
instant coffees packed in glass/plastic
We are here to help you “GROW” your business-not
merely provide product
merely provide product
We have extensive history in developing successful PL
coffee programs
coffee programs
Easy Accessibility-you will have DIRECT contact with
VP Sales, and President
VP Sales, and President
Access to IRI/Nielsen data
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Manufacturing Facilities
Coffee Holding has two (2) manufacturing facilities:
La Junta, Co
Have capacity to roast and ground coffee in can and brick formats
Can formats - 11, 11.5, 12, 13, 23, 26, 33.9, 34.5,36,39 oz sizes
Brick format - 8.8, 11, 11.5, 12, 13 oz sizes
La Junta, CO-50,000 sq ft
Cleveland, OH
Generations Coffee is the specialty division of Coffee Holding Company
We roast all of the coffee beans separately by variety and in small controlled batches
Our flavored coffees are blended with flavoring oils while still whole bean ensuring
then oils fully integrate the product. The result is a higher quality, more consistent
flavor profile. Our experts team of roasters and blenders can either duplicate the
flavor profile of current or competitive products; or we can assist you in creating
blends and flavor profiles unique to your label
then oils fully integrate the product. The result is a higher quality, more consistent
flavor profile. Our experts team of roasters and blenders can either duplicate the
flavor profile of current or competitive products; or we can assist you in creating
blends and flavor profiles unique to your label
Generations roasting facility is OCIA International organic certified and produces
organic coffees in compliance with the National Organic program (NOP). We are
also Fair Trade Registered and carry an assortment of coffees with these dual
certifications
organic coffees in compliance with the National Organic program (NOP). We are
also Fair Trade Registered and carry an assortment of coffees with these dual
certifications
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Revenue Mix
Specialty Green Coffee ~60%
Unroasted raw beans imported from around
the world and sold to large and small
roasters and coffee shop operators
the world and sold to large and small
roasters and coffee shop operators
Private Label Coffee ~25%
Coffee roasted, blended, packaged under
customer specifications and sold under a
white label brand
customer specifications and sold under a
white label brand
Branded Label Coffee ~15%
Coffee roasted and blended to our
specifications and packaged and sold under
our seven proprietary and licensed brands
specifications and packaged and sold under
our seven proprietary and licensed brands
% of Revenue
¹
(1) Approximate percentages
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Specialty Green Coffee
Approx. 60% of revenues
Charter Member of the Specialty Coffee
Association
Association
300+ specialty green coffee customers and
regional roasters, coffee houses, single store
operations and mall coffee stores.
regional roasters, coffee houses, single store
operations and mall coffee stores.
Direct contact with specific farmers in
producing countries to ensure certain
qualities of Arabica coffees during the year
producing countries to ensure certain
qualities of Arabica coffees during the year
25+ year relationship with Green Mountain
Coffee Roasters.
Coffee Roasters.
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Approx. 25% of revenues
Roast, Ground, Pack coffee for Retail,
Wholesale, Mass Mdse, Club under
their corporate label
Wholesale, Mass Mdse, Club under
their corporate label
Key customers - Sears (KMart), Family
Dollar, Associated Wholesaler Grocers,
Kansas City , Winco, Raley’s, Sunflower
Markets and Ingles Markets.
Dollar, Associated Wholesaler Grocers,
Kansas City , Winco, Raley’s, Sunflower
Markets and Ingles Markets.
Private Label Coffee
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Approx. 15% of revenues
Five (5) proprietary brands, Café Caribe,
Café Supremo, Via Roma, Fifth Avenue
and Don Manuel 100% Colombian coffee
Café Supremo, Via Roma, Fifth Avenue
and Don Manuel 100% Colombian coffee
License with Del Monte for North
American rights to S&W Gourmet coffees
American rights to S&W Gourmet coffees
Branded Label Coffee
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Branded Coffee Labels
Café Caribe
Specialty espresso that targets
espresso coffee drinkers in the
Hispanic market
espresso coffee drinkers in the
Hispanic market
S&W (Licensed Brand)
An upscale canned coffee
established in 1921
established in 1921
Café Supremo
A specialty espresso targeting
espresso drinkers of all
backgrounds and tastes
espresso drinkers of all
backgrounds and tastes
Il Classico (Licensed Brand)
An unpscale S&W branded
espresso product
espresso product
Fifth Avenue
A blended coffee that is a
popular alternative to national
branded coffee.
popular alternative to national
branded coffee.
Via Roma
Italian espresso targeted at
traditional espresso drinkers
traditional espresso drinkers
Don Manuel
Produced from the finest 100%
Columbian coffee beans. An
upscale quality product which
commands a premium
Columbian coffee beans. An
upscale quality product which
commands a premium
Recent Acquisition -2010
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Organic Products Trading Co., Vancouver, WA in April 2010 became a wholly
owned subsidiary of Coffee Holding Co. OPTCO is one of the largest purveyors of
top quality sustainable coffees in North America and their over $10.0 million in
annual revenues has boosted a thriving and successful green coffee sales division.
owned subsidiary of Coffee Holding Co. OPTCO is one of the largest purveyors of
top quality sustainable coffees in North America and their over $10.0 million in
annual revenues has boosted a thriving and successful green coffee sales division.
In addition, OPTCO’s current customer base of approximately 200 roasters are
able to purchase the traditional gourmet Arabica coffees from our current
inventories and our customer base has immediate access to a consistent supply of
the highest quality Organic and Fair Trade Arabica coffees from a premier
organization whose specialty has been procuring these coffees from around the
world over the past twenty plus years.
able to purchase the traditional gourmet Arabica coffees from our current
inventories and our customer base has immediate access to a consistent supply of
the highest quality Organic and Fair Trade Arabica coffees from a premier
organization whose specialty has been procuring these coffees from around the
world over the past twenty plus years.
Joint Ventures
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Coffee Holding Co., entered into a joint venture with Caruso’s Coffee of Brecksville, Ohio.
Generations Coffee Company, LLC, a Delaware limited liability company engages in the
roasting, packaging and sale of private label specialty coffee products from its Brecksville
location. Coffee Holding owns 60% of the Joint Venture and Caruso’s Coffee owns 40% of the
Joint Venture. The profits earned by the Joint Venture are divided among the parties in
accordance with their respective percentage ownership interests. Coffee Holding is the
exclusive supplier of coffee inventory for the Joint Venture.
Generations Coffee Company, LLC, a Delaware limited liability company engages in the
roasting, packaging and sale of private label specialty coffee products from its Brecksville
location. Coffee Holding owns 60% of the Joint Venture and Caruso’s Coffee owns 40% of the
Joint Venture. The profits earned by the Joint Venture are divided among the parties in
accordance with their respective percentage ownership interests. Coffee Holding is the
exclusive supplier of coffee inventory for the Joint Venture.
This Joint Venture allows us to bid on the private label gourmet whole bean business we
have not been equipped to pursue from an operational standpoint in the past. With this
specialty roasting facility in place, in many cases right in the backyard of our most important
wholesale and retail customers, we are in an ideal position to combine our current canned
private label business with high-end private label specialty whole bean business. High-end
specialty whole bean coffee sells for as much as three times more per pound than the canned
coffees in which we currently specialize.
have not been equipped to pursue from an operational standpoint in the past. With this
specialty roasting facility in place, in many cases right in the backyard of our most important
wholesale and retail customers, we are in an ideal position to combine our current canned
private label business with high-end private label specialty whole bean business. High-end
specialty whole bean coffee sells for as much as three times more per pound than the canned
coffees in which we currently specialize.
GCC was recently awarded the whole bean bag business at Associated Wholesale
Grocers, Kansas City. This is our 2nd largest bag program after Ingles Markets.
Grocers, Kansas City. This is our 2nd largest bag program after Ingles Markets.
In November 2011, Coffee Holding Co. entered into a joint venture with Global Mark LLC,
a new venture focusing on supply of instant coffee and related products. Coffee Holding owns
40% of the Joint Venture.
a new venture focusing on supply of instant coffee and related products. Coffee Holding owns
40% of the Joint Venture.
This Joint Venture is expected to provide us with direct access to a quality supply of
instant coffee products, which are integral to our overall product mix to our most important
wholesale and retail customers. We also expect to utilize this Joint Venture to grow our
instant coffee sales and to reduce our annual costs by eliminating the middleman.
instant coffee products, which are integral to our overall product mix to our most important
wholesale and retail customers. We also expect to utilize this Joint Venture to grow our
instant coffee sales and to reduce our annual costs by eliminating the middleman.
Socially Responsible
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Cup for for Education was founded in 2003 by Karen Gordon, Director of
Specialty Green Coffee of Coffee Holding Co. Cup is a non-profit with 501 3C
status. Cup works hard in coffee communities around the world in creating better
learning environments for some of the poorest children in the world. CFE
provides books, computers, libraries, teachers and schools.
Specialty Green Coffee of Coffee Holding Co. Cup is a non-profit with 501 3C
status. Cup works hard in coffee communities around the world in creating better
learning environments for some of the poorest children in the world. CFE
provides books, computers, libraries, teachers and schools.
Cafe Feminino was founded in 2004 to support women coffee producers in
Central and South America to take a step toward achieving empowerment. This
step came in the form of growing, harvesting and producing their own coffee
called Café Femenino. The Café Femenino Foundation, which provides grants to
select programs and projects that enhance the lives of women and their families
in coffee growing communities around the world. The Café Femenino Coffee is
imported exclusively by OPTCO and distributed by more than 80 roasters whom
pay a premium above the fair trade price.
Central and South America to take a step toward achieving empowerment. This
step came in the form of growing, harvesting and producing their own coffee
called Café Femenino. The Café Femenino Foundation, which provides grants to
select programs and projects that enhance the lives of women and their families
in coffee growing communities around the world. The Café Femenino Coffee is
imported exclusively by OPTCO and distributed by more than 80 roasters whom
pay a premium above the fair trade price.
Coffee Holding is a proud sponsor of The Avon Foundation. Also we are a
Opening Ceremony breakfast sponsor at several of Avon Walk for Breast Cancer
events throughout the U.S.
Opening Ceremony breakfast sponsor at several of Avon Walk for Breast Cancer
events throughout the U.S.
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Coffee Holding Company, Inc.
Coffee Market Report
Friday, March 2nd , 2012
N.Y. Arabica prices continued to chop around for the second week in a row between $2.01 - 2.07 in the most active
May contract. Roasters continue to buy futures at current levels, somewhat offsetting the rising differentials out of
Central America and Colombia. Funds remain heavily short the market and a failure to break the $2.00 level
nearterm should spark a substantial shortcovering rally.
May contract. Roasters continue to buy futures at current levels, somewhat offsetting the rising differentials out of
Central America and Colombia. Funds remain heavily short the market and a failure to break the $2.00 level
nearterm should spark a substantial shortcovering rally.
London Robusta futures continue to remain firm; although without a N.Y. rally, they could continue to tread water.
A downward revision for next year’s Vietnam and Uganda crops by a combined 3M bags continues to underscore
London’s strength.
A downward revision for next year’s Vietnam and Uganda crops by a combined 3M bags continues to underscore
London’s strength.
Also, world coffee exports fell 10% on the year in January, to 7.99 million 60-kilogram bags, the International Coffee
Organization said Wednesday. Exports from October to January, the first four months of the 2011-12 crop year,
decreased by 3% to 32.59 million bags, compared with 33.61 million bags last season.
Organization said Wednesday. Exports from October to January, the first four months of the 2011-12 crop year,
decreased by 3% to 32.59 million bags, compared with 33.61 million bags last season.
N.Y. May close - $2.0180
London May close - $.9163
Have a Good Weekend,
Andy
Weekly “C” Market Report
Growth Strategies - Past & Present
Selectively pursue strategic acquisitions, alliances, private label
i.e., Licensing agreement with Del Monte, acquisition of Premier Roasters
Joint Venture - Generations Coffee
Acquisition of OPTCO
Target the U.S. - based Hispanic coffee market, leverage Café Caribe &
Café Supremo brands
Café Supremo brands
Hispanic population in U.S. growing at 9x average rate
Largest minority demographic in U.S.
Extremely brand loyal
Drink 4x as much coffee per capita as their Anglo Saxon counterparts
Continue to expand green coffee sales to medium and larger sized
Regional roasters
Regional roasters
Develop branded and green coffee sales in Chinese market
Targeted acquisitions with companies whose profile and business
philosophies mesh with ours
philosophies mesh with ours
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Current Trends
Elevated green unroasted coffee prices
Forced many small and medium size roasters who in the past have procured
full lots of coffee from conventional trade houses to now purchase coffee
from Coffee Holding Co. in order to stretch cash flows and reduce
commodity market risk exposure
full lots of coffee from conventional trade houses to now purchase coffee
from Coffee Holding Co. in order to stretch cash flows and reduce
commodity market risk exposure
Smucker’s purchase of Café Bustelo and Café Pilon, two Spanish
brands
brands
These two brands compete with our Café Caribe and Café Supremo brands
and may mark the beginning of ethnic oriented coffees going main stream
and may mark the beginning of ethnic oriented coffees going main stream
It is likely that after these brands are folded into the Folger’s family, retailers
will need to carry multiple brands of this category and will view our Café
Caribe and Café Supremo brands in an increasingly favorable light
will need to carry multiple brands of this category and will view our Café
Caribe and Café Supremo brands in an increasingly favorable light
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Income Statement
