2. Daniel Carver –
Solicited to Successfully Grow
Contract Manufacturing of
KGM
building a Sustainable
Forecast-able
Plan-able system
3. Carver’s Project Responsibilities:
1.Interpret ambiguous contract language into measurable events to be
supported by internal and external parties.
2.Establish intra-company processes created to ensure Keurig was reimbursed
for all prices, costs, and indirect expenses, as specified in agreement.
3.Developed unique critical tracking processes to meet lot-tracking of raw and
finished goods; and aligning results with KGM and Partner systems.
4.Forecasted, analyzed, and reported financial assumptions related to Partner
revenue and standard margin to Finance and Business Development groups.
5.Provided feedback to the Business Development team to ensure negotiated
positions did not negatively impact operations; to be used in future agreements.
4. Organization Chart - Matrix reporting structure:
- Direct line to Finance; dotted line to Business Development
CFO
VP Finance
Supply Chain
VP Finance
Treasury
Dan Carver
Partner Fin Mgr
Supply Chain
Controller
SVP
Business Dev
Sr Director
Partners
Director
Bus Dev
Brand Mgr
Partner Z
Brand Mgr
Partner Y
Brand Mgr
Partner X
- - - - - - - - - - - - - - -
Business Development negotiated the Agreements
Partners group executed the agreements.
Dan Carver supported Partner group as their Finance Manager
5. Contract Manufacturing - Strategic Deployment
• Obstacle: Continue growth and profitability after k-cup patents expire.
• Strategy: Partner with major coffee brands.
• Risks:
• Dilution of Owned and Licensed brands: inevitable after patents expire; to be managed.
• Successfully integrate make-to-order business within a make-to stock structure.
• Benefits:
• Partnering with major coffee brands legitimizes “certified Keurig brewed” as the single-serve
brewing system.
• Producing the k-cups for major brands leverages production capabilities and limits growth of rogue
producers to small players.
• Partnered companies take product to market incurring inventory and market risks, on both raw and
finished goods.
• Proactively gain single serve market insights from Partner forecasts versus reacting to incomplete
IRI data.
• Volume growth lowers per cup costs of fixed and semi-variable manufacturing costs versus rogue
producers
CONFIDENTIAL
6. Portfolio when Partners Team Initiated
• One (1) Contract Manufacturing partner on line, when Partner team
started. Partner team focused on execution of agreements and
assimilation into KGM’s design-to-produce and order-to-cash processes.
Series2
CONFIDENTIAL - volume & $ are directionally accurate
Contract Manufacturing
3% of 2010 k-cup volume
and $20 MM of revenue
7. Contract Manufacturing - Growth Timeline
Activity by year:
2010 2011 2012 2013 2014
Initial Partner: JM Smucker
Brands: Folgers and Millstone
Partner team created
Starbucks and Dunkin added
Brands: Starbucks, Tazo,
Seattle’s Best and Dunkin (in
DD restaurants only)
September 2012
K-cup patents expire
Unilever added.
Brand: Lipton
JM Smucker adds
Cafe Bustello brand
2015
Kraft and PEETs added
Brands: Maxwell House,
Gevalia, Yuban Gold,
McCafe, and PEETs
Dunkin expands to retail
Reilly Foods & Community
Coffee added.Brands: New
England Coffee, Luzianne,
French Market and Community.
Bigelow and Celestial convert
from Licensed to Partner.
Campbell’s soup also added.
CONFIDENTIAL
8. Portfolio at end of assignment
• By September of 2015, there were eleven (11) Contract Manufacturing
partners representing 20 brands.
Series2
Contract Manufacturing
represents 35% of 2015 volume
& $700 MM of revenue
CONFIDENTIAL - volume & $ are directionally accurate
35%
$700 M
9. Contract Manufacturing - Summary
• Project Results:
✓ Major coffee brands brought power to the portfolio of brands
Keurig offers which has legitimized the single-serve system.
✓ Keurig brewers dominate the at home and away from home
environments.
✓ Roughly 8 million brewers sold in 2014 and 2015, annually.
✓ Keurig produces approximately 90% of all k-cups three years
after the expiration of the k-cup patents.
✓ Partners are delighted with the design-to-produce and order-to-
cash processes; we compete on product and service.
CONFIDENTIAL