Keurig

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Nicholas LazarisPresident/CEO Board MemberChristopher StevensVice PresidentSales and MarketingRichard SweeneyVice President,Operations and EngineeringSpring 1998 Keurig, Inc*

Keurig - 1992Ian Greenwood

Peter DragoneK-Cup19951996MBA: Keurig- *

Keurig *

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Peter Dragone (Late summer 1996)KeurigOnstott

Nick Lazaris Keurig (Feb 1997).

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Nick Lazaris1997KeurigOffice Specialists12001989-1995M.W.Carr2000*

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Keurig*

Keurig System DemoVideoclip*

Green Mountain Coffee RoastersExhibit 4 1998 Profile: $55.8 million: $24.6 mil: 321: $25.8milNASD symbol: GMCRGrowing net income*

MDT75%K-CupK-Cup*

K-Cup1.2.3.1,000*

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Keurig*

$150

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* exhibit 7

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

OCSKeurigUS$400/US$1000/US$0.275~0.375; 1/3US$0.4~0.51-2830min(=US$7.5)

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or

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,&$15 us$400~500,1~2, US$60~90*

ex: Maxwell16 milliom, US$25~70Keuring-US$100~150, :

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FilterfreshCaf System 7FlaviaUSM&M/MarsUS$2000~2500/US$2500/US$1200/US$0.29 US$0.22 US$0.39

Filterfresh*Filterfresh29/cup40,000 existing units ($2500/ea)

Flavia*FlaviaPart of M&M/Mars (most significant competitor, but didnt have passion)39/cup2000 ($1200 ea)

Caf System 7*Caf System 722/cup17,000 units ($2500 ea)

K-cupMTSMTSUS$700K, US$180K, KeuringMTSUS$550K, US$900K700K: , Keurig*

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PilgrimQuantumAmalgamatedUS$575KUS$500KUS$525K234,Keurig1500Keurig ,

Vandelay,1000,us$789us$825*

LakelandPillaUS$680/US$700 ()Keurig ,

What happen now ?

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Remarkkeurig http:// www.keurig.com *

Thank You!

1-KeurigKeurig?A. B. Green MountainC. KeurigD. E. *

1- : 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 = 250Number 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 = $0.25Price per K-cup to Office Manager = $0.5*

2-Nick Lazaris: MTS?3-4-? OCS5-*

Brewer vandor(Vandelay)

Line Vendor(MTS)Keurigs Business ModelKEURIGBrewers$650-825Office Coffee Supply DistributorsOffice ManagersBrewers$1000Brewer at ?Kcup@$0.5/EACoffee Roaster(Green Mountain)$0.04 Royalty per Kcup$500k~700kFilter LineKcups @ $0.25End usersStarbucks $0.75~1.0*

Vendors for Fill line*

Vendors for fill LineMTSMike Moore900K?Pilgrim=575K

Quantum Industries=500kMinnesota(1500)

Amalgamated Technologies=525KMinnesota(1500)

Vendors for Brewers*

Vendors Vandelay IndustriesWellesley789825

Lakeland Instruments680Minnesota(1500)

Pilla Manufacturing700New York

Make or Buy-

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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*

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know-how () () *

Reduced Costs *

(Communication) Business Ethics (Purchasing) .. (Production Management) (..) (...) *

Keurig Launched in 1998Targeted the Office Coffee MarketSince then:28,000 brewers shipped240,000,000 K-Cups shipped nearly 500,000/dayOCS profitable since 2000#1 OCS single-cup system in the United States5 roasters -6 coffee brands, 79 varieties of K-Cups

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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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