Jammin Java's Comment on Sales, Marketing and Customers
Domestic Grocery
Domestic grocery is the core focus of the Company with the strategy of continuing
to expand into key markets and gaining new accounts and building on the base of
accounts we have already. Within the U.S. grocery and specialty retail channel,
the Company’s products are distributed through several distributors such
as UNFI, Kehe, C&S and DPI and we also distribute directly to certain customers.
We sell to retailers such as Krogers, HEB, Wegmans, Safeway, Albertsons, Sprouts,
Target, Jewel-Osco, Market Basket, Whole Foods, South Eastern Grocers, Ahold,
Hannafords, Shaw’s, Fairways, Ingles, Acme, Meijers, Lucky’s Markets
and Farm Fresh. During the past year we have expanded our distributor relationships
nationally in the United States. We expect our ongoing discussions with retailers
will enable us to place our products in more chains throughout the year and we
continue to seek to expand our product placement with grocery retailers and distributors
throughout the United States and internationally.
Over the course of the last few years, we gained distribution in over 11,500 stores
in the United States, which represents 35% of all commodity volume (ACV) for all
grocery. Throughout fiscal 2017, while we will still look to gain additional distribution,
we are not pursuing it at the same pace we did during the past 18 months. Our
objective for our existing distribution is to add more SKUs (Stock Keeping Units)
to our current distribution, increase our turn rate (velocity), and build brand
awareness to drive further growth.
One of our primary drivers is to enhance our brand and increase our turn rate
on shelves. In order to accomplish that we will continue to promote the Marley
Coffee brand as well as our Recyclable RealCup™. In July of fiscal 2016,
we launched a new version of the Marley Coffee RealCup™ capsule that is
compatible with the Keurig Green Mountain K2.0. The recyclable RealCup™
which utilize a recyclable capsule that is accepted by many curbside recycling
programs. The technology and intellectual property is owned by Mother Parkers,
however we are one of the first and primary super premium product to launch in
market amongst Mother Parkers portfolio of brands especially at our scale.
Based on our current distribution in the U.S. and an average of three of RealCups™
per store, if we can get an additional customer to purchase one SKU per store,
per week, within our existing distribution, we believe we can generate approximately
~$8 million in additional revenue per year. Our next objective is to get all nine
Recyclable RealCup™ Marley Coffee SKUs within our current distribution.
SKUs or Stock Keeping Units are a store’s or catalog’s product and
service identification code, often portrayed as a machine-readable bar code that
helps items be tracked for inventory.
We believe that our recyclable RealCup™ capsule (Ecocup) has been one of
the most innovative and sustainable single serve products to hit the market and
we’ve seen material growth results because of it. Keurig Green Mountain,
the largest company in the single serve space in North America has expressed their
belief that there should be a recyclable solution for K-Cups, however they have
only set a 2020 target for their commitment to making 100% of their K-Cup packs
recyclable, which we believe both validates what we’re doing and gives us
a 5 year first mover competitive advantage.
Based on the positive feedback from retailers and customers as well as some preliminary
sales information, EcoCup has had a very positive impact on our operations. We’ve
even been nominated by the Nexty Awards and Beverage Awards for our innovation
and packaging. Our preliminary data has shown that EcoCups by themselves have
helped with incremental growth in accounts like Market Basket and Kroger.
International
Our international business is one of the key components of our revenues. For our
international accounts, we rely on first in class operators to take our brand
to market and handle all of the distribution and marketing for the products. We
provide brand support to our international accounts. We currently have key distribution
in several countries, which include Canada, the United Kingdom, South Korea, Mexico
and Chile. These countries primarily sell to the food service industry, which
includes hotels, restaurants and cafes. From their success in food service, they
have expanded distribution into retail distribution. Mother Parkers takes our
products to market in Canada through both a licensing agreement and buy-sell relationship.
Our U.K. distributor roasts and packs Company approved coffee and resells it to
customers throughout Europe.
The International Coffee Organization recently reported that it expects global
coffee demand to rise 25% by 2021. We believe that we are in a strong position
to capitalize on that growth and our goal is to continue finding top-tier operators
like the ones we have in place in Canada, South Korea, Chile, Mexico and the United
Kingdom. Through a distribution arrangement we have in place with C&V International
(which has no relation to Fifty-Six Hope Road), we generate revenue through coffee
sold to Marley Coffee branded coffee shops in Korea (which we have no ownership
or management in) and also general licensing fees through such coffee sales.
Through a distribution arrangement we have in place with C&V International,
we generate revenue through coffee sold to Marley Coffee branded coffee shops
in Korea (which we have no ownership in) and also general licensing fees through
such coffee sales.
The JAB acquisition of GMCR could help get brewers into the market in which we
would have the ability capitalize on.
Canada
In Canada, through Mother Parkers, the Company is distributed in grocery retail,
OCS and food service.
Mother Parkers distributes our products in over 2,000 stores, including some of
the largest retail chains in Canada, which include Loblaw’s, Sobey’s,
ID Foods, COOP, London Drugs and Metro. Our goal is to establish distribution
of RealCups in grocery stores for the next two years and then to introduce our
bagged coffee by 2017. We estimate that Mother Parkers will sell approximately
15 million RecyclableRealCup™ through grocery retail, OCS and food service
within this fiscal year.
Mother Parkers has also found success in bringing our coffee into its food service
business. They have been able to establish our products in several large restaurant
chains and expect to expand the business over the next few years. For its food
service business, Mother Parkers currently buys 8 ounce, 2.5 ounce fractional
packs and 2 pound bags directly from the Company. The projected volume for this
year is approximately 140,000 pounds of coffee with plans to get to 500,000 pounds
by 2017.
