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Copy of MONTEBIANCO

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by

Davide Rossetto

on 11 March 2014

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Transcript of Copy of MONTEBIANCO

MONTE BIANCO
CAFFE'
Monte Bianco Caffe' is a coffee manufacturer and distributor.

It was present in the market for over 80 years and it established throughout the time a valuable brand image.
CASE:

Managing board and CEO of the firm have to decide whether it will be profitable for them to undertake a change in their production mix, devoting part of their capacity to private distributors selling MB's product with their own label on it
If MB do serve them it will face the constraint of reducing its presence in Premium Coffee Market
How to allocate manufacturing capacity then?
Mixed Strategy
(Optimum Solution)
Private Label Strategy
From the earliest '00s onwards, European and Italian coffee markets faced a slight reduction in "outdoor" consumption of coffee, compensated by the increase in the "indoor" consumption, meaning mainly Mokas, capsules & coffee machines.
M
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Back in time....
end of year 2000
Coffee Is the second most traded commodity worldwide; still its price is subject to high volatility and it's calculated on daily bases.
Market For Coffee depends on several highly unpredictable variables (e.g. weather conditions, political instability in producer countries, plant diseases...) and its
prices (*)
are strongly affected by the oligopoly of multinationals controlling coffee production and supply chain; and from speculation on public international exchange where coffee is listed.
http://www.ico.org/
http://www.agriregionieuropa.univpm.it/
http://gain.fas.usda.gov/Recent%20GAIN%20Publications/The%20Italian%20Coffee%20Market%202010_Rome_Italy_12-3-2010.pdf
http://www.iandmsmith.com/index.php?q=con,29,+Coffee_Market_Report
After the desertion of ICA in 1989, international agreement aiming to stabilize prices for green coffee; world faced an exponential increase in price volatility.
In exhibit 1 you can observe the price contraction, occurred since the adoption of "free" determination of prices, due to:
overproduction
caused by the extension of plantations and their production technology
insertion in the market of previous years
stock
stagnation of demand
in traditional importers

In numbers: demand remained constant at 105 million bags while instead supply increased from 86 to 120 million bags over 5-years period (1995-2000).
Italy always scores high in the ranking of world coffee exporters. At present time we are third.
How Do Prices of Unrefined Coffee are now Calculated?
Compound price for coffee is, simplifying, the aggregated weight of prices of the 4 most worldwide traded qualities:
Robustas
, Arabicas (
Colombian Milds
,
Brazilian Naturals Milds
and
Other Milds
)
Ico Composite Price Indicator Jan-Feb 2014
Ico Group Indicator Daily Prices Jan-Feb 2014
Farming
Cherry Harvesting
( + 3-4 years)
Procuring
Exporting
Roasters
Blend Preparation
Retailers
Consumers
Comparative Analysis
Premium Brand
Private Brand
Relatively Stable Market
Long term commitment with customers
Production volume depends on how man retailers are served
Can be stored in inventory
Receivables within 90 days
Lower Margins
Cash flows are affected by delayed retailers' payments
Not significant increases in marketing, administrative and R&D expenses
Volatile Sales, especially during downturns (e.g. 1998)
Margins are higher compared to PB's ones
Impossibility of holding finished product in inventories due to quality requirement
Therefore production is highly dependent on Market demand
R&D and Marketing expenses are higher as consumers preferences are to be considered
Receivables in a month-time resulting in healthy Cash Flows
Summer demand for coffee is generally low
Brief introduction to MB's
MB is a family run business. CEO Giacomo Salvetti is founder's grandson.

It's located in Milan and distributes throughout Europe one of the finest coffee in the Continent which continuously improve thanks to investments in Research and Development department.

People are appointed, within the firm, to personally choose and pick out the best coffee quality coming from the best plantations of South America and major producers.

In 1998 MB survived the economic downturn expanding its production and devoting part of it to better serve supermarket private labels.

The actual CEO, lately, is running the business in a pretty aggressive manner. He recently ordered an expansion in production capacity achieved by the means of building new facilities (150 000 Kg of expanded production capacity costing 6 billion liras).
Market for coffee is highly competitive and that pushes firms to compete based on match of price and quality.


Market is globally expanding and it sees the emergence of new ways for people of enjoying coffee such as capsules, high tech home coffee machines and the spreading of american-style coffee shops chains.
Volume Sales Per Advertisement
Expected Production Plan
Expected Cash Flow
Projected Income Statement
Financial Ratios Analysis
Capital Structure Ratios
Gross Profit Margin
CECCHIN Arianna
839758
MEHILLI Lunida
837734
ROSSETTO Davide
838237
SCLOSA Greta
838557
VISMAN Chiara
837670
GROUP
*
Get Cracking With Numbers
...
BIBLIOGRAPHY
ANY QUESTIONS
Thanks !
Contribution Margin per Volume
Cost Per Unit
Return On Equity
Drawing Our Conclusions
....
From the Field to the Cup ....
Full transcript