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    SALES PRODUCT PROPOSALKen Dite Asmarani/11202241045

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    Executive SummaryThe Coffee Master is a new business providing high-quality, full service distribution ofcoffee, specialty beverages and beverage-related supplies to coffee houses and espresso

    stands throughout the Spokane and Northern Idaho market.The principal owners are Steve and Jennifer Smith, whose combined experience bringsoffice management, high levels of customer service, and over 20 years in distribution andsales management. At this time we are seeking additional equity capital to compliment ourown investment and are seeking to arrange a bank line for inventory and receivablesfinancing. We have firm commitments to distribute several high-quality new age beverageproducts, and have verbal commitments from independent retailers throughout the Spokaneand Northern Idaho market to carry our product. We plan to distribute our first productswithin 30-60 days of finalizing financial arrangements.

    Sales projections for The Coffee Master are estimated to begin at approximately

    $2,229,000 the first year, increasing to approximately $2,558,000 in Year 2 andapproximately $2,936,000 in Year 3. Our net profit is projected at approximately$283,000 the first year, increasing to $406,000 by the end of the third year of operation.

    Distinguishing characteristics of our business will be the combination of managementexperience, sales and distribution experience, high-quality, innovative products andexceptional customer service. In particular, what really sets up apart is that we are theONLY full service distribution company servicing the coffee and specialty beverageindustry in the Spokane/Northern Idaho market. In addition, The Coffee Masterhas anexclusive contract to distribute a new, groundbreaking product that would enable us to gainimmediate access to a majority of the potential customer base.

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    1.1 Objectives

    To open and operate a successful coffee and new age beverage distributorship inthe Spokane/Northern Idaho market, employing three to five employees the firstyear.

    To obtain a minimum of 100 regular customers in the Spokane/North Idaho marketthe first year of operation.

    Achieve first year sales of $2,000,000. Maintain an average gross margin of 25 percent. To produce a net profit of at least $400,000 by the end of the third year of

    operation.

    1.2 MissionThe Coffee Master intends to become a recognized distributor of specialty beverages andbeverage-related supplies and services to coffee houses and espresso stands throughout

    Spokane and Northern Idaho.The Coffee Master plans to develop strong relationships with key customers so we will beviewed as indispensable partners, rather than just another supplier. We will work closelywith each customer to recommend product assortment unique for their retail base,appropriate stocking levels, pricing and display assortments, as well as promotional ideasand material to increase sales. The Coffee Master will seek out and work with themanufacturers we represent to deliver the most innovative and exciting products possibleto the customers we serve. We are not only selling product, we are selling service.

    1.3 Keys to Success

    Innovative quality products. Individualized customer service - providing our customers with what they want,

    when and how they want it. Only full service distribution company in the Spokane/Northern Idaho market. Fully integrated programs to help customers increase sales through menu

    development, creative promotions, advertising, and custom marketing material. Exclusive distribution rights to ground-breaking products not currently available in

    our market. The combined experience of the principal owners bring upper office management

    skills, high levels of customer service, and over 20 years in distribution and sales

    management.

    Company SummaryThe Coffee Warehouse, Inc. is a new S-corporation business located in Spokane,Washington, and will be established based on the details of the following plan.

    2.1 Company Location & Facilities

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    programs, custom-designed marketing material, informative monthly newsletters, trainingand product demonstrations, as well as information on the latest market trends in thecoffee/specialty beverage industry.

    3.1 Product & Service DescriptionPRODUCT DESCRIPTION

    The Coffee Master will carry a variety of quality products that will enable us to providefull service delivery to espresso stands and coffee houses. Our underlying philosophy inselecting products is to choose lines that will bring consistent quality, competitive prices,and product satisfaction to our customers. We have personally researched and sampledeach of the following products that we offer to ensure the quality we guarantee.

    Lowery's Gourmet Whole Bean and Wired Willey's White Coffee Assorted Gourmet Syrups & Coffee Toppings Chocolate, White Chocolate and Caramel Syrups/Sauces Oregon Chai Concentrate Jet Cafe and Jet Tea Fruit n' Tea Freeze Cappuccina line of product Big Train line of product Red Bull Energy Drinks Good Cow Concentrated Milk with Custom Dispensing Equipment Fresh Baked Goods Assortment of White, Pre-printed Paper, and Clear Beverage Cups Systems - as

    well as an assortment of other paper supplies

    At this time, the majority of these products are only available to customers through

    wholesale vendors such as Cash and Carry retail outlets - therefore it is the customer'sresponsibility to acquire these products by their own means. The Coffee Master will makethese same products available through our high quality, full service delivery - bringingthese products directly to their doorstep at a competitive price.

    SERVICE DESCRIPTION

    An important component of our business is not just our products, but our service. Inaddition to our full service delivery, the following are other important service elements thatwe will offer to our customers:

    Ideas to help our customers increase sales through menu development, creative

    promotions, co-op advertising, and much more. Custom designed marketing material such as printed banners, promotional posters,

    punch cards, pre-purchased beverage cards, reader boards, etc. Distribute a monthly newsletter featuring the latest coffee trends, new industry

    equipment, breaking trade news, promotional ideas, new creative recipes, andupcoming events.

    Samples of the latest product releases - with eye-catching point-of-sale to advertisenew items to the end consumer.

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    Routine equipment maintenance and training.

    3.2 Competitive EdgeKEY COMPETITIVE STRENGTHS

    No other wholesaler in the market offers full service delivery with the variety of productwe feature. We are better positioned than our main competitors to take advantage of theincreasing demands of coffee and specialty beverage supplies because we focusexclusively on high-quality distribution and customer service. In addition to the variety ofproducts we feature, The Coffee Master has exclusive distribution rights to Good Cow'sconcentrated milk/dispensing system. This product is not currently available in our marketby any other suppliers.

    KEY COMPETITIVE WEAKNESSES

    Our primary weakness is that we are a new business competing largely against establishedsuppliers. To significantly build sales, we must not just find new customers - we must take

    customers away from existing suppliers. However by offering a superior selection ofsupplies, new groundbreaking products to the market, and focusing on high-quality serviceand full service delivery, we feel will can quickly establish accounts and build strongrelationships. Co-founder Jennifer Smith has had many discussions with owners of coffeeand espresso businesses that confirm this opinion.

    3.3 Sales LiteratureSales literature to be distributed to both current and potential customers will includebrochures, fliers, newsletters, as well as other print media such as print advertisements.Jennifer Smith is highly skilled in graphic design and desktop publishing, and has quality

    design and printing equipment to publish professional pieces at a low cost.

    3.4 SourcingThe Coffee Master will purchase product directly from manufacturers, as well as masterdistributors. Because this eliminates the broker or "middle man," this allows us to operateon a 25-30% profit margin, while providing our customers with competitive prices.

    To further reduce costs, The Coffee Master plans to share product shipments out ofCalifornia with distributors operating in Portland, Oregon and Tri-Cities, Washington.Other product not being shipped directly to Spokane will be purchased and picked up inSeattle, Washington. The Coffee Master plans to send a truck to Seattle on a bi-weeklybasis to pick up product, thus cutting costs by an average of 5%.

    3.5 TechnologyTo streamline the efficiency of our distribution methods, The Coffee Master plans to usethe latest in cutting edge technology - not only in the warehouse - but also in the trade.

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    All of our drivers/sales representatives will be equiped with Thinque MSP handhelds andsoftware. Thinque MSP applications will reduce field expenses, decrease day's salesoutstanding, and increase worker efficiency. Features can be used in or out of thewarehouse and include managing returns and collections; adjusting item price, profit ormargin; applying promotional items to an account; streamlining orders; tracking inventory;reducing out-of-stocks; and providing sales history reports. All information recorded in thehandheld is available in real time to be viewed by management in the office .

    3.6 Future Products and ServicesWithin the first year of business, The Coffee Master intends to open a retail/wholesalestore and high-quality showroom. Products will be available for purchase by both ourwholesale customers who may need product between delivery days, as well as retailconsumers interested in purchasing product for their home use. We will also offer ashowroom that will feature equipment, supplies, trade resources, and information onmarketing services with examples of marketing and promotional material available tocustomers.

    With the addition of the product showroom, The Coffee Master will offer customersquarterly product and training demonstrations that will be presented by trained beverageexperts from the industry.

    The Coffee Master also plans to hold semi-annual trade shows for current or potentialcustomers. These trade shows will allow customers the opportunity to sample products,talk to manufacturers, learn about new industry trends, review marketing material, andnetwork with other business owners in their market.

    Market Analysis SummaryCoffee is the second largest commodity market next to oil, and growth is expected tocontinue at a strong pace for the foreseeable future. The specialty beverage industry isgrowing at an equally strong pace, with sales growth in some categories projected to growat rates of 40% per year.

    This growth offers excellent opportunities for new companies to enter this market, and weare excited about the possibilities of what The Coffee Master can accomplish in theSpokane and Northern Idaho market.

    4.1 Market SegmentationThe gourmet coffee and specialty beverage industry is divided into several segments.Consumers who enjoy these products purchase drinks at restaurants, coffee houses, sportsvenues, drive-thru espresso stands, and even inside other retail establishments that mightfeature an independent beverage stand.

    As illustrated in the chart below, within the market surrounding Spokane, Rathdrum, PostFalls and Coeur d'Alene, there are currently 250 drive-thru espresso stands, 18 coffee/teahouses, 52 independent inner-retail espresso stands, and approximately 10 stands in

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    locations such as sports venues, university campuses, and etc. These figures are notincluding the number of restaurants, bars and cafes that also feature these beverages.

    4.2 Target Market Segment StrategyWhile the market is already sizeable, this industry continues to grow. New espresso standsopen their doors to the public on a monthly basis in our market, and it isn't uncommon tosee numerous espresso stands within a one or two mile radius. The article below, publishedby a national coffee retail magazine, discusses our market's unique drive-thru espressoindustry. The sales potential in this market is unlimited.

    The Coffee Master initially plans to target these drive-thru espresso stands, as well as allinner-retail espresso stands within our designated market. It is this segment that is most inneed of the services we are planning to offer. Essential needs include: quality products atcompetitive prices, first class service, and strong sales support. It is most often these smallowner-operated businesses that are neglected by larger suppliers and are forced to servicethemselves. It is also these smaller businesses who could most greatly benefit frommarketing services, sales support, and full service product delivery. Providing the samehigh-quality service, within the first six months of operation, The Coffee Master plans toexpand our target into formal coffee houses and cafes, and as business grows andstabilizes, eventually evaluate the needs of potential customers in the restaurants and barindustry.

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    4.3 Market GrowthCoffee has been a growing industry for the past several years. In the gourmet/specialtycoffee industry alone, the figures show an impressive rate of growth in the United States.

    The new age beverage industry is growing at an equally strong pace. Sales growth in thechai tea category alone is estimated to be 50% historically, with projected growth rates of40% per year. Energy drinks, including brands such as Red Bull - and trends such as JetTea - are driving the new age beverage growth, and have increased 50-fold in the past threeyears.

    Bubble Tea has been a rapidly growing market in Asia, though it is relatively new to theUnited States. Introduced to trend setting marketing such as San Francisco and Seattle,sales have been exploding - and the craze of the "Tapioca Pearl" is expected to spreadthroughout America.

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    4.4 Industry AnalysisThe coffee and specialty beverage industry is pulverized, with hundreds of manufacturers,brokers, suppliers and retailers. Unlike the beer/soda industry, with large companies suchas Anheuser Busch, Pepsi and Coca Cola controlling most of the market, the coffee andspecialty beverage industry does not have large national chains with market control.

    In an open industry growing at such a strong rate, The Coffee Master is in position tocapitalize on the customer's need for quality product, exceptional service, and an effectivepartner to success.

    4.5 Industry ParticipantsWith the rate of growth in the gourmet coffee market, in addition to the recent trends in JetTeas and other specialty beverages, the industry is comprised of many small participants,each focusing on only a few specific items or brands at a time. As the markets evolve, weexpect the industry to consolidate with larger distributors representing more of a vastselection of products in each market.

    Currently in our segment of the industry, there are no large national chains with marketcontrol. There are also few products that are offered with exclusive rights to one market.

    While this is the case with many products, The Coffee Master is working withmanufacturers to change that practice, and not only represent a larger variety of productthan others in our industry, but also acquire exclusive rights to many of the products in ourportfolio.

    4.6 Distribution Patterns

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    of our effort and energy on this particular area, we expect to quickly develop and maintaina leadership position. The Coffee Warehouse's key personnel will stay in contact with ourcustomers, and will be able to respond to changes in this market much faster than ourcompetitors.

    The Coffee Master will offer the best, most highly personalized service in the marketplace.

    Being a small, owner-operated company, we intend to use this to our advantage to beabsolutely certain that every one of our customers receive excellent service. We will go outof our way to make sure that our customers know that they truly matter to us. Sales repsand in-house personnel who deal with customers will be carefully trained and given widelatitude for insuring that customers are always satisfied.

    5.1 Marketing StrategyOur basic marketing strategy is to work with customers on a one-to-one basis to ensuretheir supply needs are being met and help develop unique marketing programs for each ofthem. We intend to prioritize customer service and make it a key component of our

    marketing programs. We believe that providing our customers with what they want, whenand how they want it, is the key to repeat business and positive word-of-mouth advertising.Because we want to develop close working relationships with our customers, we want toestablish accounts in as personable a way as possible. It is for this reason that we willoverwhelmingly emphasize in-person sales calls to build accounts.

    We will closely integrate all of our marketing and sales efforts to project a consistentimage of our company and a consistent positioning of our products and services. We willbuild this image around our name "The Coffee Warehouse, Inc." and emphasize tocustomers the high-quality service that is behind this name.

    To support our marketing initiatives and product knowledge, we will attend as many areaconventions and trade shows as possible to ensure we are offering the most up-to-datemarket trend information.

    5.2 Promotion StrategyRelationships are the key to success in the distribution business. Personal selling willremain our most important means of promotion. Both Steve and Jennifer Smith will leadthis effort - Steve, with his skill and experience in sales and distribution, and Jennifer incustomer service and relations. In addition to personal selling, The Coffee Master hasidentified several other means of advertising and publicity.

    The Coffee Master will send news releases to local media and press, as well as trademagazines to try to get product and company feature coverage in front of the eyes of ourcustomers - as well as the end consumer. We will also produce a few generic press releasesabout the products we are distributing for our customers to use toward publicity coveragefor their businesses in local publications such as the Spokesman, The Inlander and LocalPlanet.

    Third, we shall have a monthly newsletter for current of potential customers. Thisnewsletter will highlight new and current trends in the industry, upcoming conventions and

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    5.5 Sales ForecastAs indicated in the table, ogrowth rate of approximately

    5.6 MilestonesThe following table and chart

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    r sales are forecasted to increase rapidly, w30%.

    are the important milestones for The Coffee W

    ith an annual

    rehouse.

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    Management SThe Coffee Master will be osmall employee base that wilare covered in more detail in t

    6.1 OrganizationalThe Coffee Master will be mof expertise cover many of th

    The organizational structure idistribution management ancustomer service, accountingTogether they will be responsi

    The support staff at the officeto Jennifer. Because Stevewill be able to support any dwhen Steve is out of the offic

    The goal of The Coffee Maseach other so that the customopportunities, advancementcompetitive within the regiopreferred employer within our

    6.2 Management T

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    ummaryned and operated by its founders, initially w

    l cover sales and delivery. Management and phe topics to follow .

    Structurenaged by the two founding partners, whose infunctional aspects of the business.

    very simple. Steve Smith will be responsible fdelivery systems. Jennifer Smith will be r

    , shipping and the general administration ofble for product selection and sales and marketi

    and warehouse, as well as the delivery personill be spending a majority of his time in the ty-to-day needs that the personnel may have., he will be in constant contact via computer or

    er is to have a team of committed associatesr's expectations can be exceeded. Our goal is t

    opportunities and a level of income and beand job classification. It is our long-term

    niche of the beverage distribution industry.

    eam

    orking with arsonnel plans

    ividual areas

    r the routing,sponsible forthe business.g.

    el will reportrade, Jenniferowever evenphone.

    ho empowero offer careernefits that isoal to be the

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    more difficult service issues.respond immediately to almousually means granting immemerchandise to an order.

    Financial PlanThe Coffee Master projects tprojections for FY2004 are$2,936,137 in FY2006. Casanalysis, and other financial d

    7.2 Break-even AnThe following table and chestimate of approximately $

    margin, we will need to sell 6warehouse lease, vehicle learunning costs.

    7.3 Projected ProfiThe following table and chartincluded in the appendix.

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    e will also give employees enough latitude st any customer request or complaint - which i

    diate credit for damaged merchandise, and add

    e gross margin to be at approximately 20-25at $2,229,652 increasing to $2,558,584 in

    h-flow analysis, balance sheet, business ratietails are shown in the appendix.

    lysisrt illustrate our break-even analysis. With o15,000 per month, operating on average at

    7,666 units to break-even in a month. Fixed coses, utilities, insurance, payroll, and an estim

    t and Losss show the projected profit and loss. Monthly p

    that they canthis industry

    ing additional

    ercent. SalesFY2005 and, break-even

    r fixed costsa 25% profit

    ts include ourtion of other

    rojections are

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    7.4 Projected CashThe following table shows cash flthe first year. Monthly cash flow

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    Floww for the three years, and the chart illustrates monthlrojections are included in the appendix.

    cash flow in

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