Coffee Network Marketing Strategy

Profitable Program Inside!

Coffeehouse Quality Now Convenient JCX was built on the belief that everyone deserves a great cup of coffee no matter where they choose to buy it. Our program allows you to offer the hand roasted specialty coffee your customers have been asking for in an eye-catching setting that s custom fit to your environment. Retailers see an average 30% increase in sales with the JCX program! Did you know? Hot dispensed beverages rank among the top 5 categories accounting for 70% of total gross margin dollars in a c-store!* *Source: AWMA Update April 17, 2008. http://awmanet.org/update/update.html (April 23,2008).

Convenience stores are in the middle of the morning coffee wars crossfire between coffeehouses and QSR s. "They need to decide whether they will be a battle casualty or step up to defend their turf."* In 2009, burger chains share of specialty coffee servings increased from 9% to 11% an increase of just over 22% from the prior year! An increase of two (2) share points is quite a jump, considering the coffee category in this segment was flat.** * Source: Crawford, Mark. The McCafe Attack. 22 February 2010. csnews.com. 8 March 2010. ** Source: Lisanti, Linda. Feeling the Heat. Convenience Store News - March 1, 2010. 3

Pillars of Quality We will responsibly source from only the world s finest coffee farms. We will slowly hand roast our beans, locking in all of the natural flavors and aromas that give our coffee its uncommon smoothness. We will only use air to cool the roasted beans, producing coffee that is extraordinarily fresh. The Perfect Cup At Java City we are committed to sourcing, roasting, and brewing the perfect cup of coffee by implementing our pillars of quality every step of the way. 4

Our Story 1985 Founded in Sacramento, California on the corner of 18th & Capitol Avenue 2000 Java City merges with Bewley s coffee and tea in Dublin, Ireland 2002 Java City launches Java City Express, catering to convenience stores 2003 Java City introduces Eco-Grounds, a line of coffee that supports social, environmental, and economic causes in coffee producing countries 2008 JCX is born, ushering in Java City s cutting edge vision for specialty coffee in convenience stores 5

Your Customer Needs Increase your profits by meeting the demands of current and future specialty coffee customers. Top 3 things that influence beverage purchases* (76%) Taste (54%) Price (43%) Variety Customer Need Demands specialty coffee JCX Delivers Great tasting coffee with an uncommon smoothness Starved for time Your customers won t need another stop Energy/caffeine Great alternative to those high-sugar energy drinks Budget conscious Coffeehouse quality at a fraction of the price Demands flavor options Wide variety of creamers and cappuccino flavors Comfortable environment Non-intimidating self-service atmosphere without long lines or fancy names *Source: Chanil, Debra. Convenience Store Shopping Behavior: Dispensed Beverages. Convenience Store News Shopper Panel 2004: 58. 6

Sales Drivers JCX provides multiple touchpoints to bring customers into your store. Sidewalk Sign Gas Pump Topper Window View Thru Window/Gas Pump Decal Customer Frequency Card STORE Did you know? More than 50% of all gas customers pay at the pump and never enter the store at all!* 7 *Source: Realities of the Aisle. How C-Store Customers Shop. A Supplement to Convenience Store News July 2004: 8.

Optimize Sales and Reduce Costs JCX is the one stop solution for your specialty coffee and tea, including hot and cold options. AIRPOT SYSTEM 1.5 GALLON SYSTEM Airpots 1.5 Gallon Shuttles 1.0 GALLON SYSTEM Travel mugs: Drive repeat business Iced coffee: Capture additional sales with this creamy treat Cappuccino: Drive sales with quality and variety Double Black: Drive sales with highenergy coffee Hot tea: Average 79% profit margin Cold Beverage So Placed away from set nex 8

Build Your JCX 1. Choose a coffee brewing solution AIRPOT SYSTEM Brewer with Airpots Serves up to 100 cups per day* Target up to 60 cups during peak demand* Space Requirement 6 to 8 ft of counter space 1.0 GALLON SYSTEM Brewer with 1.0 Gallon Airpots Serves 100 250 cups per day* Target 60 100 cups during peak demand* Space Requirement 8-10 ft of counter space 1.5 GALLON SYSTEM Brewer with 1.5 Gallon Shuttles Serves 200 500 cups per day* Target 100 400 cups during peak demand* Space Requirement Min. 12 ft of counter space 2. Choose program essentials Cappuccino Iced coffee Iced tea Hot tea JCX branded cups Creamers Sugar/Sweetener lution Iced tea: On demand, great taste profile, and operational simplicity t to ice supply. Lids and stir sticks 3. Choose a beverage center solution Single-Sided: for wall sets Double-Sided: for island or window sets 9 * Based on 16 oz cup

Profitability Increase Retail Sales Finally, a specialty coffee program that increases both your sales and profits. JCX will exceed your customers expectations while generating the higher price point you need to drive your business. Profit & Margin Per 16 oz Cup PRODUCTS Coffee Cappuccino Hot Tea Iced Coffee Iced Tea Total Cost of Sale* $0.59 $0.68 $0.32 $0.80 $0.48 Suggested Retail Price (SRP) $1.39 $1.49 $1.39 $1.99 $1.39 Profit Per Cup $0.80 $0.81 $1.07 $1.19 $0.91 MARGIN 58% 54% 77% 60% 65% *Cost per cup includes product,16 oz cup, lid and sleeve. Volume and profitability subject to actual sales. Volume Profitability Cups Per Day PRODUCTS PRODUCT MIX RATIO 500 400 300 200 100 Coffee 60% $240 $192 $144 $96 $48 Cappuccino 22% $89 $71 $53 $36 $18 Iced Coffee 10% $29 $48 $36 $24 $12 Iced Tea 6% $27 $22 $16 $11 $5 Hot Tea 2% $11 $9 $6 $4 $2 Profit Per Day $396 $342 $255 $171 $85 Profit Per Week $2,772 $2,394 $1,785 $1,197 $595 Profit Per Month $12,003 $10,366 $7,729 $5,183 $2,576 PROFIT PER YEAR $144,036 $124,392 $92,748 $62,196 $30,912 *Cost per cup includes product,16 oz cup, lid, and sleeve. Volume and profitability subject to actual sales. Equipment & Brewing Optimization Our team of experts will make sure that you have the right equipment to meet your brew demands at all times of the day. Brew to match demand Morning (6 am - 10 am) Mid-Day (10 am - 2 pm) Evening (2 pm - 11 pm) Overnight (11 pm - 6 am) Did you know? 75% of all coffee is sold in the morning!* * Source: Bishop, David. The State of Food Service. 5 June 2007. csdecisions.com. 12 May 2008. 10

We have been a proud customer of Java City for many years and have had great success with capturing the morning commuter by offering their specialty coffee program. Rick Teske Nella Oil Dan Cox, president of Coffee Enterprises, Burlington, VT, shared his thoughts on what c-store operators can do to increase coffee performance: "The money is in selling coffee by the cup versus buying it by the pound. Do the math coffee is 98.5% water, so start with good water and use enough of high quality coffee to achieve a great tasting cup. Consumers are now demanding great coffee everywhere they go don t get left behind. Dan Cox / Coffee Enterprises 11

Our Coffee Authentic specialty coffee so great, your customers won t go anywhere else! Taste for Every Palate We hand roast each coffee to lock in the flavors and aromas. We offer a large selection of bold, full, and smooth coffees to please every palate. TYPES OF COFFEE Smooth Pleasantly mild body, aromatic, and well-balanced Full A richer body, with pronounced aromas and flavors Bold A robust body, with a complex and rich flavor Flavored Rich tastes percolate medium-roasted, fine coffees Decaffeinated Same delicious taste profile, with the caffeine removed Coffees from Around the World Our Roastmaster sources coffee from only the world s top crops, working with coffee farmers to find the most interesting and unique beans. SUSTAINABLE COFFEE Java City works with growers who meet the environmentally, socially, and economically responsible standards that are critical to sustainability. These include Fair Trade Certified, Rainforest Alliance, and certified organic coffees. 12

Complementing Products Double Black Extra STRENGTH, Extra CAFFEINE, Extra FLAVOR! Enter the heavyweight! Update and reinvigorate your coffee lineup by adding Double Black to your offering. Double Black brings extra profits and added value to your location. Triple Shot Mocha Your customers are going to love the extra caffeine, extra mocha taste, and extra energy from Triple Shot Mocha. Iced Coffee This delectable treat is the perfect way to bring in mid-morning and afternoon traffic. With a profit margin of 60%, how can you resist? Iced Tea Quench their thirst and bring in profit margins of 65% with superb flavors of Bewley s iced teas. Additional Products Each brew solution has the following products available to satisfy all of your customers tastes: CAPPUCCINO HOT TEA SWEETENERS Top 4 reasons customers purchase energy drinks: 76% Energy Boost 35% 34% Mental Alertness Refreshment Double Black delivers in all areas! 32% Taste 13

Support Since installing the Java City program, we ve experienced a 33% increase in coffee profits, and have increased cups per day sold. We are seeing new clientele and have received a positive response from our longtime customers. It has been a great improvement compared to our previous program. We are happier with our coffee, service, and increased coffee sales. Mike Butzis C-Store Management 14

Support Program implementation On-site specialty coffee training Professional account management Quality assurance visits National equipment service network Distribution network Customer Care Java City has a team of customer service professionals located at our corporate office ready to serve you. 877.528.2289 www.javacity.com