The Stockbroker.com Report
June 25, 2004
Special High Growth Situation
(OTC BB: PBDY)
Shares Outstanding:
39 Mil
Peabodys Coffee Inc.
Float:
26Mil DBA Black Rhino Coffee™
Recent Price: $0.075 660 Commerce Drive, Ste. B
52 Week Bid Range: $0.049 - $0.24
Roseville, CA 95678
Capitalization: $2.9 Mil
Bus.
Tel: (916) 788-2630
Website: www.blackrhinocoffee.com Email: info@blackrhinocoffee.com
BUSINESS SUMMARY:
Peabodys Coffee Inc. (OTC BB: PBDY) is a retailer and marketer of certified organic branded specialty coffee beverages and packaged whole bean coffee under the Black Rhino Coffee™ brand. Since the opening of its first full-service retail outlet in 1995, the Company has experienced solid growth and growing consumer demand for its specialty coffee. Peabodys currently owns and operates multiple retail outlets throughout California and has a growing number of branded locations operating under independent license agreements. Its current plan is to fully exit the full-service business by the middle of 2005 in order to give its full attention to building and managing the Black Rhino Coffee™ brand in the retail supermarket environment.
The Company’s entire complexion will change as it moves rapidly from a business characterized by many widely distributed and lower skilled employees, high capital requirements and operations-heavy to a business characterized instead by a tight-centered group of highly skilled employees, lower capital requirements and brand-management.
Currently, Black Rhino Coffee™ is on the shelves of approximately 800 supermarkets and mass market retailers, including Wal-Mart, BI-LO in South Carolina, Ingles in North Carolina, and other supermarket chains serviced by SuperValu in the mid-Atlantic region. With organic coffee being one of the fastest growing segments of the specialty coffee market, Black Rhino Coffee™ has uniquely positioned itself in the high growth natural foods category. Its three hand-roasted blends -- Alma, Spiritu and French Roast -- are grown chemical-free under strict, totally natural conditions. All Black Rhino Coffee™ is independently certified under the United States Department of Agriculture's National Organic Program
Peabodys’ management is focused on positioning Black Rhino Coffee™ as the leading packaged organic specialty coffee brand in what almost certainly will become an enormous and lucrative segment of the grocery market.
COFFEE INDUSTRY – A $MULTI-BILLION DYNAMIC GROWTH MARKET
According to the National Coffee Association (“NCA”), 79% of the adult population in the U.S. drinks coffee. These coffee drinkers spend about $18.5 billion on their beverage of choice, compared with $13 billion in 1993. Furthermore, United States coffee consumers are now purchasing more value-added products through the specialty coffee industry, which is driving up the overall market value. In short, consumers are not drinking more coffee, but they are choosing to drink better coffee. The transformation of the coffee category in the U.S. has been profound – evolving from staple drink to gourmet beverage in a single decade. These changes allow the coffee sector to compete more fully with all the other non-alcoholic beverages for “share of throat.”
According to the Specialty Coffee Association of America (“SCAA”), U.S. specialty coffee sales have soared from $45 million in 1969 to over $6 billion today! The National Coffee Association (“NCA”) reports that for the past ten years, the general trend has been an increase in the number of coffee drinkers on a daily and occasional basis. The NCA also reports:
· Daily consumption of specialty coffee has grown from 3% of the adult population of the adult population in 1997 to over 14% or 29 million daily drinkers in 2003 – a fourfold increase in just seven years.
· Occasional consumption of specialty coffee has surged from 35% of the adult population in 1997 to 62% in 2003 – from 80 million to in excess of 127 million drinkers.
The specialty coffee market continues to evidence sustainable high (organic) growth characteristics that the SCAA expects will continue through the year 2015. Favorable underlying dynamics driving demand in the market include:
Ø An “installed base” of millions of coffee drinkers. Coffee appeals to people across virtually all demographics in all parts of the world, and through a wide range of events, demand for coffee has endured for hundreds of years.
Ø Increasing awareness and availability of specialty coffee, leading to expanding trial and adoption.
Ø The increasing pace and pressures of everyday life, stimulating demand for “affordable luxuries” and “small self-indulgences.” Specialty coffee fits directly into these categories.
Ø The aging baby-boom generation has an affinity for specialty coffee, which correlates highly with education and income levels.
BOOMING ORGANIC FOODS INDUSTRY PROVIDES ENORMOUS MARKET OPPORTUNITY FOR BLACK RHINO COFFEE
According to Mr. Amarjit Sahota, founder of Organic Monitor, the global market for organic foods was expected to “conservatively” expand from $26 billion in 2001 to approach $80 billion in 2008. On a worldwide basis, the amount and variety of organic foods and beverages offered in local supermarkets, big supermarket chains and mass-market retailers have mushroomed, as organics migrate from specialist to mainstream marketing channels.
In the United States, organic food and beverages have emerged as a major trend in the new millennium. Retail sales of organic products in the U.S. are growing steadily, showing an annual compound growth rate of more than 22% over the last five years. A study published by the Natural Marketing Institute in cooperation with the Organic Trade Association estimated that U.S. retail sales of organics would grow from $9.3 billion in 2001 to approximately $20 billion by 2005 assuming a “conservative” annual growth rate of 20%.
The U.S. boom in organic foods and beverages is fueled by increasing consumer demand resulting from:
ü consumer concerns about the general safety of their food;
ü the higher quality of organic products;
ü the social and environmental benefits that organic production represents;
ü the perceived health benefits of consuming organic products.
Approximately six in ten Americans (63%) buy organic foods and beverages at least sometimes and two-thirds (68%) believe that organics will be a major food trend in the coming years. Certified organic foods and beverages provide American consumers with peace of mind, an assurance of safety and the chance to cast a vote for a more environmentally friendly kind of agriculture.
With the high growth forecast resulting from rising consumer awareness and demand, the organic movement is clearly moving from the commercial fringes into mainstream. The entry of the $515 billion U.S. supermarket industry is widening the availability of organic foods. Increased availability, coupled with raised consumer interest, are two key factors behind the rapid increase in organic sales. With 2% or 3% growth at the established all-purpose grocery store, the large retailers are attracted to expanding their organic programs as they offer annualized growth rates of 20% or higher. Organic is now the fastest-growing category in the supermarket. Higher margins, faster growth, and customer loyalty enhance the organic grocery niche.
AMBITIOUS MARKETING GOALS PAVE WAY FOR MAJOR COMMERCIAL SUCCESS
The Company’s strategic priorities – which carry the organization to mid 2007 – reflect the intention to build Black Rhino into a powerful premium organic coffee company with significant retail market share, and with prominent “mind share,” that marks Black Rhino Coffee™ as the top United States-based certified organic specialty coffee company.
The Company is ahead of schedule to meet the aggressive end of fiscal year 2004/05 goal, made possible in large part by the quality of the product. There is very little coffee available as packaged product in the fast-growing organic category, and sophisticated beverage buyers are impressed with Black Rhino Coffee™ and want to see it on the shelves of their stores.
Management is committed to building Black Rhino Coffee™ into a powerful and sustainable premium organic brand so singularly distinct in the mind of the specialty coffee consumer that when they hear the Black Rhino Name, they reflexively think “COFFEE WITH BODY AND SOUL”.
The Company is now creating that necessary strong presence by its focus on widespread entry into supermarkets and its marketing strategies that are designed to educate the consumer about their excellent “organic” product. Over the next 12-18 months, the Company believes it has the potential to double or triple existing supermarket distribution of Black Rhino Coffee™. Rapid growth in supermarket shelf presence will give the Company strong distribution and brand awareness – and all the characteristics of a target for acquisition by an industry giant that seeks access into this key sector without the growing pains associated with a new brand.
Beginning in fiscal year 2004/05 the Company will initiate a major push into rapid distribution growth and widespread consumer brand positioning, characterized by education and awareness about organic coffee. That campaign will be designed to make Black Rhino Coffee a “must stock” brand among retailers.
ORGANIC CERTIFICATION
Pursuant to the United States Department of Agriculture’s (“USDA”) National Organic Program (“NOP”), all organic production and handling operations must be certified to the national standards by USDA-accredited certifying agents by October 21, 2002 in order to label products as “organic”.
Black Rhino Coffee™ is certified by Quality Assurance International (“QAI”), a global leader in organic certification. QAI was one of the first certification agencies to gain accreditation from the USDA to certify organic claims under the NOP. From October 21, 2002 onward, Black Rhino Coffee™ is qualified to use the USDA “Organic Seal” on its retail packaging:
MANAGEMENT AND BOARD OF DIRECTORS
The impressive management team and Board of Directors are clearly focused on significant success with Black Rhino Coffee™. As you can see by the following short bios, this is an exceptional and accomplished team that is well qualified and has an established history of major success.
Mr. Todd Tkachuk, President, CEO and Director.
Mr. Tkachuk developed Peabodys from a startup in 1995 to a fully reporting public company today, with operations that include full service retail outlets and an expanding national supermarket presence. He has nine years of specialty coffee experience, including the redevelopment of the prominent “Tony’s Coffee” brand in the Pacific Northwest and Western Canada.
Mr. Barry J. Gibbons, Director
Mr. Gibbons built a successful career with United Kingdom-headquartered Grand Metropolitan Plc (GrandMet), ultimately running all GrandMet’s European retail businesses, representing 2,000 directly managed outlets. Following GrandMet’s acquisition of Pillsbury Companies, Mr. Gibbons was named Chairman and CEO of its Burger King Worldwide Subsidiary, a post he held for five years and for which he was named Fortune Magazine’s “Turnaround Champ” for his extraordinarily successful efforts. Currently, he is a widely sought speaker and management consultant, a newspaper business columnist, and author of several well-received books. He maintains interests in other businesses as well.
Dr. David A. Lyman, Director
Dr. Lyman’s extensive business career spans a variety of consumer oriented executive positions. He was a vice president at Capitol-EMI Music, North American Van Lines, Godfathers Pizza, and Family Vision Centers, as well as a senior director of field personnel for Pizza Hut, where he developed and held responsibility for implementation of all systems for domestic operations. He holds a Ph.D. from the University of Nebraska.
Mr. Roman M. Kujath, Director
Mr. Kujath is a successful businessman, developer and architect who has completed more than $1 billion in real estate projects, including the $100 million Place de Ville in Ottawa for the Campeau Corporation. He has been president of Roman M. Kujath Architects, Ltd, since 1975. During the course of his career he has developed broad awareness and acumen in the international business sector.
Mr. Richard Azevedo, Director
Mr. Azevedo brings more than 30 years of business acumen with a proven track record in takeovers and turnarounds. He served as mayor of the city of Auburn, CA for 2 terms and in 1987 was the recipient of the American Cancer Society’s “Man of the Year” award. Mr. Azevedo has founded and served as President of numerous companies within the health care industry. He currently manages a substantial real estate investment corporation and is a general partner in a 4 major mini storage projects valued in excess of $20 million.
SUMMATION:
Peabodys Coffee Inc. (OTB BB: PBDY) is on the verge of explosive growth within the huge multi-billion dollar “organic” coffee market with its superb Black Rhino Coffee™. We feel that the Company’s aggressive entry into thousands of supermarkets over the next few years will clearly brand Black Rhino as a leading organic coffee of choice. Management is keenly aware that the Company has an enormous market opportunity to provide a no compromise premium organic coffee at affordable prices to the millions of coffee consumers. Management expects to successfully capitalize in a major financial way on consumers’ accelerating demand for quality specialty coffee. PBDY, currently trading at less than 8 cents per share and with a market cap of less than $3 million, appears to be extremely undervalued relative to its dynamic growth potential. As the Company continues to gain important market share through its supermarket expansion, we anticipate a huge and growing acceleration of revenues, leading to strong net earnings. Based on our perceived outlook, we believe PBDY shares could be trading at many time the current price in the coming months and years.
v Quality Specialty Coffee addresses a multi-billion dollar market and is on a significant upward trend with no discernible end in sight
v Superb management team is committed to rapid success by positioning Black Rhino Coffee™ as a leading organic specialty coffee brand
v Organics are among the fastest growing segments in the grocery industry
v With a current market cap of less than $3 million, PBDY appears very undervalued and should see significantly higher prices as growth momentum accelerates
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