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Presentation Roadmap

• The Problem
• The Opportunity
• Our Proposal
• The Business Model
• Our Team
• Marketing Analysis
• Financials
• The Road Ahead

The Problem

On the go drinks and snacks from vending machines usually are:

• Expensive and with a fixed price
• Unhealthy
• Not ecologically friendly

(full of packaging)

This has led to the stagnation of the industry

The Opportunity

Changes in customer wants and technology, create new spaces for innovation

Customers are:

• Looking for healthier snack

alternatives

• More aware of their

environmental impact

• Demanding more value for

money The technology is cheaper than ever, nevertheless, few innovations have been introduced in vending machines

Our Proposal

Bringing this experience

And these quality snacks...

To the world of vending machines

Designing the ideal vending machine...

To create the ideal vending machine we need to combine creatively:

• The principle of current bulk candy vending

machines

• The “post-mix” drink dispensing

mechanism

• The “pay per litre” system of petrol pumps

+ +

Combination of...

Creating in this way a unique value proposition that allows us to:

• Sell any juice from concentrate, fizzy drink or

granular snack charging per millilitre (or gram)

• Stock the machines with products in bulk,

avoiding in this way unnecessary packaging, reducing dramatically the costs and optimizing the critical internal space in the machine

• Let the customer decide how much s/he

wants to pay and consume

Some of these products have never been sold in bulk vending machines

(Usually they just stock sweets and spherical bubble gums because of their simplicity)

We allow nuts and dried fruits to be cheaper and more convenient than ever...

But also sexier...

Upgrading their perceived value and consumer awareness

And this also applies for drinks in “bulk”

***Note that these are regular post-mix machines, not automated coin vending machines,

• ur proposal is similar in format but different in functionality***

Some of the most important features of the machine are:

For drinks:

There will be a selection of 3 Cup sizes with a cap and straw. A reusable optional plastic mug will be on sale. The customer will be able to use their own mug if wanted. There is a sensor to avoid overfilling of the container.

Some of the most important features of the machine are:

For drinks (cont):

Internally the machine holds

• ne big body of refrigerated

water (and the juice and/or soda concentrates). This allows us to stock hundreds of litres at

• nce, making it extremely cost

efficient compared with cans or bottles.

Some of the most important features of the machine are:

For granular snacks:

A paper bag will be supplied by the machine, the customer can choose and mix a selection of dried fruits, nuts and other healthy snacks. To maintain freshness the machine has a regulated internal atmosphere

Key Differentiation and Advantages

Spare change?

What makes us unique is that our customers can buy with any amount of cash that they choose. For example, if £1.00 buys 100 grams £1.10 can buy 110 grams and £0.90 can buy 90 grams

Why is this so important?

For the customer: It is more convenient. S/he can

always buy something starting from as low as 35p. If the customer has spare change, they can spend it and get a little more, making good use

• f the often useless low

denomination coins (1p, 5p, 10p...)

Why is this so important?

For our business: This can increase substantially the revenues in 2 ways:

• We are able to sell to more people because they can buy less grams/millilitres

if they don’t have enough cash

• People with additional spare change can spend it to get more of a product.

In economic terms this means that we can extract more value under the demand curve.

Eco-Friendly

• We only use recyclable packaging and as little

as possible.

• Our transport costs are substantially lower;

each machine requires less restocking and there is no wasted space between the products.

• We are energy efficient, it is easier to keep

the machines cold and insulated

Business Model

Design and prototype of the machine Intellectual Property Licences Production of the machines Self operated machines Third party operated machines

(With their own brands)

Brand Franchise

$(products) $(Licences) $(Commission

and licences)

$(Licences)

Business Model

The Action Plan

Critical milestones to implement the project

• Fund the company in Chile and

the UK

• Apply to the Chilean innovation

subsidy (£50,000)

• Start the design, R&D and

develop the prototypes in Chile

• Start the pilots of the machine

in Chile and the UK (total 50 machines)

• Licence the technology to non

competitive partners (like Coca- Cola and snacks firms)

33

Our Team

 MSc in Innovation and Technology

Management

 Work Experience as Trade

Manager, Project Manager, Consultant and Part time Lecturer

 Founder partner of Rnovo  Experienced in public and private

innovation projects. From funding to execution.

 Pedro Parraguez

Chief Executive Officer

 Serial Entrepreneur and

partner of HarneckerCarey

 MBA & Licentiate in

Economics and Management Sciences

 Senior Consultant

 Allan Jarry

Chief Financial Officer

Chief Engineering Officer

 Senior Intellectual Property

and Technology Transfer Specialist

 MBA & Mechanical Engineer  Innovation Consultant

 Jorge Fuentes

Shareholders and Start-up Organization

Marketing Analysis

Retailing US$11,171 bn Non-store: vending US$66 bn Store-based: grocery US$4,707 bn Non-store: homeshopping US$219 bn Non-store: Internet retailing US$253 bn Packaged foods vending US$6 bn Packaged drinks vending US$32 bn Tobacco products vending US$19 bn Unpackaged drinks vending US$5 bn Personal hygiene products Vending US$1 bn Other products vending US$3 bn Store-based: non-grocery US$5,809 bn Non-store: Direct selling US$118 bn

The global vending market

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

Opportunities Weaknesses Strengths Threats

Taps into demand for convenience

Socio-demographic

Negative consumer perceptions

Competitive environment

Growing fastest in emerging markets

Markets

Other convenience retail channels

Competitive environment

Penetration of developed markets Better products, wider variety

Product development

Security and payment constraints

Technology

Smoking bans, environmental laws

Legislative Markets Fast-paced lifestyles in both developed and emerging markets is resulting in growing demand for ‘on- the-go’ products, which vending is ideally positioned to cater to Products sold via vending perceived as unhealthy, low quality, over-priced –

• r a combination of all

three Security concerns limit sites, payment issues such as unsuitable coin denominations can hinder sales (India) and lack

• f electronic payment options

restricts higher unit price vending Developed markets offer a range of suitable vending locations such as stations, airports, shopping malls and leisure centres Strong growth in emerging powerhouse economies, particularly Russia and China. Improving facilities and infrastructure offer a growing number of sites suitable for vending machines New/better products and more payment options (e.g. electronic cards) enables a greater variety of products and higher price points. Better technology improves product storage and delivery Smoking bans will continue to impact tobacco vending: environmental/recycling laws will also create new costs and challenges for vending operators Demand from busy consumers spurs growth of other convenience retail - convenience stores, foodservice outlets, longer

• pening hours – all competing

with vending for sales

SWOT – Global Vending

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

 Vending accounted for 0.6% of the US$11 trillion global retail market in 2008  The global vending market experienced solid growth in the early part of the 2003-

2008 period, but decline in the important tobacco products category meant that by 2008 global value sales had returned to 2003 levels

 Global sales are expected to continue falling to 2013.

66.2 66.2 62.6 10 20 30 40 50 60 70 2003 2008 2013

US$bn, Fixed 2008 Exchange Rates

Global Vending Market Value 2003-2113

Global Vending – a US$66 Billion Market

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

Bubble size shows product sector share of market, range displayed: 1.3 - 48.8%

Traditional Vending Products Lead Category Sales

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

Asia Pacific Eastern Europe Latin America Middle East and Africa North America Australasia Western Europe

• 10
• 5

5 10 15 20

• 5

5 10 15 Growth (CAGR 2003-2008, %) Growth (CAGR 2008-2013, %)

Regional Vending Markets: Comparison 2003-2008, 2008-2013

Bubble shows total market size 2008, US$

World Markets, Growth and Size

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

New Demands New Technology

Convenience

 Vending products responding to

consumers’ ‘on-the-go’ lifestyles range from umbrellas and books to hot pizzas and freshly-made French fries Health

 Increasing consumer concerns about

health and wellness have widened the choice of healthy vended products such as bottled water, sports drinks, low-calorie foods and even fresh fruit “Premiumisation”

 Development in captive vending and

changing consumer tastes have led to a premiumisation trend. This has influenced product quality, but also

• ther factors such as a focus on

vending Fairtrade products Customer interface

 Innovations such as touch-screen

controls help vending machines to

• ffer information and advice on more

complex products, such as OTC healthcare and consumer electronics Packaging

 New packaging options widen product

• ptions, such as drinks pouches which

enable drinks to be mixed to demand from concentrates Delivery mechanisms

 New systems such as vending machine

manufacturer Sielaff’s ‘SoftDrop’ delivery or Wurlitzer’s ‘Smart Waiter’ machine means that fragile items such as glass bottles, yoghurts and digital cameras can now be vended Payment

 Electronic payment technology has

allowed vending to branch out beyond its traditional low-price product range M a r k e t D y n a m i c s

Packaged foods vending; another

category affected by growing health and wellness (H&W) trends

‘Unhealthy’ packaged foods such as

confectionery and crisps were banned from vending machines in UK schools in 2006

French schools saw a blanket ban on

all vending in 2005; a voluntary code

Growth in the key packaged foods

categories of confectionery and sweet and savoury snacks shows healthier products are a small but fast-growing area

2 4 6 8 10 12 CAGR 2002-07 CAGR 2007-12 %

Mainstream vs H&W - Packaged Food Value Sales Growth

Confectionery H&W confectionery Sweet and savoury snacks H&W sweet and savoury snacks

Key Product Trend – Healthier Packaged Foods

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

Our Consumers Demographically they are between 13 and 35 years

• ld, live or works in urban areas desiring

convenience, a healthy lifestyle and the desire for affordable food on the go.

Our Industrial Customers (B2B)

Big drinks and snacks companies like Coca-Cola and Pepsi + potential licensees like vending machine manufacturers + Entrepreneurial Franchisers

Competitors

Competitive landscape

The Single Brand Operator: The Coca-Cola Co

 Market leader in global vending:

• ver 2% value share in 2008

 Present throughout Europe, Asia

Pacific, the Americas and Middle East/Africa

0.0 0.5 1.0 1.5 2.0

2004 2005 2006 2007 2008 US$ bn at fixed 2008 exchange rates

The Coca-Cola Co, Global Vending Sales 2004-2008

The Multi-brand Operators: Lekkerland

 Europe-based Lekkerland

Deutschland GmbH & Co KG is vending’s second biggest global

• perator with value share of just

under 2% in 2008

 Key markets are Germany, Belgium

and the Netherlands Selecta AG

 The company operates both

captive and public vending machines across 23 markets, with 150,000 machines serving 25,000 companies and total annual sales

• f nearly US$900 million

50

Financials

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Chile – (CLP m) 37262.6 38357 38987.3 39590.9 41740.9 39833.7 41902.4 44344.6 47254.3 50457.6 54021 United Kingdom – (£ m) 848.6 944.2 834.8 628.8 470.5 446.2 438.2 435.4 434.1 434.5 436.8

50 100 150 200 250 300 350 400 450 500 2010 2011 2012 2013 2014 Chile - CLP to £ mn United Kingdom - £ mn

UK – Chile potential market sales forecast

Source: EUROMONITOR 2009 Global Retailing, Vending - The Future of Automated Retail

Machines Buying Leasing Replacing Upgrading R&D Distribution Delivery Refilling Commission Payments to site

• wners

Product Products Ingredients Packaging Operation Repair Maintenance Power

What Do Vending Purchases Pay For?

• Sources of initial funding:

Chilean innovation subsidies in the form of seed funding up to £50,000 Chilean angel investors up to £150,000 Partners initial investment up to £100,000 TOTAL: £250,000 to start up without using any bank credit

• Initial R&D requirements:

1 year office rent + related costs (Chile): £12,000 Design, engineering and prototyping costs: £120,000 Intellectual property protection at least in Chile, the US and the UK: £20,000 Technology Acquisitions: £50,000 TOTAL: £202,000

• Initial marketing, legal and other

expenses: £48,000

• Cash to start: £50,000
• TOTAL start-up costs: £250,000
• Estimated cost per machine: £5,000
• Cost to serve a machine: £15 per visit
• Each machine should generate a

monthly gross profit of at least £400 pounds/month

Key financial data

***All the values are in pounds

Highlights and sales by year

By the third year we should break even

In sum: lots of challenges ahead but a big business in the horizon!