Specialist
Former VP at Starbucks Corp
Agenda
- Demand and supply impacts of coronavirus and 2020 US coffee grocery outlook
- Update on the grocery channel competitive landscape – Starbucks (NASDAQ: SBUX), Nestlé (VTX: NESN), Keurig Dr Pepper (NYSE: KDP), JDE Peet’s (AMS: JDEP) and private label
- Strategic developments behind the Starbucks-Nestlé alliance, and mid-term structural growth and profitability outlook
- Key trends and developments in the coffee industry
Questions
1.
Could you outline the pre-coronavirus Starbucks business, its evolution in US grocery retail and the development of the range or SKUs?
2.
How is the portfolio segmented? How were you assessing the multi-pack formats vs single serves, pre- pandemic?
3.
Could you outline some of the key competitors in the US coffee grocery channel?
4.
Which pre-pandemic trends or demand dynamics have driven growth in the in-home coffee category? You mentioned flavour proliferation but maybe that’s fallen by the wayside.
5.
How has the pandemic and lockdown impacted consumer behaviour in the US coffee grocery channel?
6.
Presumably there was some benefit from coffee shop closures, despite some still offering home delivery. Is there a way to disaggregate the benefit from coffee shop closures in the channel vs upfront pantry loading?
7.
Consumers were panic buying larger pack sizes or simpler, larger SKUs in other FMCG or CPG segments. Is that also applicable to the coffee segment?
8.
Are you aware of any specific supply or logistics constraints to coffee in grocery? Clearly food service is taking a bit of a hit so capacity could be moved around.
9.
How are you assessing H2 2020 prospects for the category? There are a couple of dynamics to note – coffee shops reopening or adjusting business models, the prospects of a recession, higher unemployment levels and lower consumer confidence. How do you think that impacts the 12-18-month outlook on the retail side?
10.
You said you expect low demand to continue from coffee in QSR, but I understand that QSR is substantially remodelling the format to more takeaway apps for in-home, drive-through and so on. Do you still think there will be some form of CPG uplift?
11.
Do you think the economics work for home delivery coffee?
12.
How recession-proof is the coffee grocery channel in the US? The 2009 recession didn’t involve today’s dynamic of a closed or partially operating QSR channel. What happens to pricing if there is unemployment?
13.
Could you outline some of the moving parts behind supplier margins for CPG during the pandemic, the recovery period and through 2020-21?
14.
What secular changes due to coronavirus might impact the industry, whether around consumer behaviour, channel shift between CPG and QSR, or potential e-commerce acceleration?
15.
Where does Starbucks sit in the US CPG spectrum of speciality to mainstream?
16.
Could you elaborate on the strategic rationale for the players in the Nestlé-Starbucks alliance?
17.
Do you think Nestlé did the deal because it needed CPG presence in the US or was it the international opportunity with the Starbucks brand?
18.
How are you assessing the deal structure or the economics, perhaps focusing on the US market because I understand they’re different, internationally?
19.
How successful would you say the revenue synergy story has been – the combination of the Starbucks brand, Nestlé’s CPG retail distribution strength or anything else you might want to comment on? What innovation did both players bring to the party and how did that potentially support the revenue synergy?
20.
What are your thoughts on the Starbucks licence and Keurig take-up? There was a bit of confusion around it at the time the deal was struck, possibly even conflicting views on the Nestlé core, what was then Keurig Green Mountain core.
21.
How would you characterise the competitive strengths and weaknesses of the Nestlé-Starbucks JV in the context of US CPG? How do the strengths and weaknesses compare with other key players in US grocery?
22.
How are you assessing the profitability potential of the combined entity in US CPG, regardless of whether the economics are Nestlé or Starbucks? Is the JV ultimately about market share gains and revenue synergies?
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