tag:blogger.com,1999:blog-4815867514277794362.post5327344778848110579..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: Getting it wrong over coffeeJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger27125tag:blogger.com,1999:blog-4815867514277794362.post-64884176149306321512010-10-13T01:51:47.246+11:002010-10-13T01:51:47.246+11:00bringing this back from the graveyard: rumours aro...bringing this back from the graveyard: rumours around GMCR that Nestlé might be interested. <br />loved this post by the way!Jacobhttps://www.blogger.com/profile/15280566363678151025noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-48686009185577787302010-01-02T18:04:48.277+11:002010-01-02T18:04:48.277+11:00I believe Starbucks failed mainly due to 2 reasons...I believe Starbucks failed mainly due to 2 reasons. 1) Many coffee businesses are not big enough to be run "under management". They deliver enough profit usually to a mum/dad investor. (E.g. 150-200k). The profit is not big because of fierce competition but also because there are not enough people per SQm2. In cities like NY, LA, the density of the population means most coffee shops are able to be run under management and be profitable.<br /><br />2) Wages are higher in Australia, and there's more benefits (super) being paid out to Australian workers vs their US counterparts. Coffee is a numbers game and there is very little room to move on selling low priced items. It is my belief that these two are reasons why Starbucks was unable to monetize in Australia.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-38557601128691790932009-12-30T16:45:18.509+11:002009-12-30T16:45:18.509+11:00i've read 2 of your posts as a US citizen i do...i've read 2 of your posts as a US citizen i don't think u understand the coffee business here at all starbux represents us about as well as kangaroo farmers do you.<br /><br />http://finance.yahoo.com/q/co?s=GMCR<br /><br />not pushing my analysis but here are some comps for this industry <br /><br />http://nomenware.net/cgi-bin/htcgi.php?dir=../c/db/Industry&fil=342.txt&method=csv2htri<br /><br />u think buffet would touch gmcr or sbux ?Anonymoushttp://gelgin.wordpress.com/2009/12/27/casino-games-as-a-model-for-optionsnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-33005334910431673302009-12-03T12:18:21.240+11:002009-12-03T12:18:21.240+11:00One detail on the contract from the Diedrich inves...One detail on the contract from the Diedrich investor presentation page 13 July 2009 Corporate Presentation:<br /><br />"Agreement expires July 2013 and “Evergreens” thereafter based upon certain volume thresholds, which are currently being exceeded"<br /><br />It's pretty well known that is 6+ cents royalty per every K-Cup. Maybe they think it would be easier to hit the thresholds with Peet's behind it? Not sure if the contract explanation is the motivation... They always talk about a razor blade model of selling the brewers at costs and collecting royalties. How does keeping the contract in house further that along?Tinynoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-60080084566261462152009-12-02T14:10:46.185+11:002009-12-02T14:10:46.185+11:00One correction with respect to the American labor/...One correction with respect to the American labor/coffee market - hiring unskilled labor to work in your coffee shop used to be effective for Starbucks. America has a huge amount of under-utilized service talent in college/grad students who are too much of slackers to find a real job (I've been in this position) and under-educated but pragmatically-skilled minorities (I haven't been in this position but I've met plenty of guys who would be $100k/year salesmen instead of counter workers if they were white college graduates). <br /><br />Starbucks used to get these workers but at least in my NYC experience they now get the same people who work at McDonald's (worst of the employable and some who probably should not be employed). The cream of the low-paid, low-skill crop wants to work somewhere that they feel good about. It feels much cooler to work at the funky coffeeshop near campus where you can play your own music than to push Norah Jones CDs at the Starbucks. Starbucks used to have the "cool-place-to-work" reputation but lost it in the face of over-expansion, over-corporatization, and increased competition from local shops. <br /><br />Some of the most successful consumer-facing companies are those who can appeal to the highest-potential unskilled laborers. Whole Foods does well in part because they pay the guy who cuts the fish a couple bucks extra and treat him a little nicer. As a customer, you then get to meet the world's most charismatic guy who only knows how to cut fish instead of a sullen, overweight teenager who screws up your fillet because he really doesn't care. The good reputation of Whole Foods does a lot of the work in getting the higher-quality guy to work there instead of the other supermarket down the block. It also means that sometimes the bagger is a pedantic hippie who wants to talk to you about burdocks rather than someone who can get the milk and bread into separate bags, but a lot of people prefer to shop in this kind of store.najdorfnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-31839730761368984972009-12-02T11:04:59.953+11:002009-12-02T11:04:59.953+11:00Very well written article.
The one way to insure ...Very well written article.<br /><br />The one way to insure that a crooked company will fall is to focus your work on the CEO. If you can implicate the CEO, the scheme will unwind and the price will fall.<br /><br />Asymmetric distribution of pressure. Somethings gotta give...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-78437089159532445102009-12-02T07:15:57.965+11:002009-12-02T07:15:57.965+11:00Shorting individual issues, even more so, shorting...Shorting individual issues, even more so, shorting the major indices is a once in every 10 year prop bet. It's more like gambling. The returns are usually quite small.<br /><br />You'll never book a 5, 10, 20, or 50 bagger shorting anything.<br /><br />Best to spend the time finding the goods.<br /><br />anon, <br /><br />Bob DobbAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-46213048272372577412009-12-02T02:15:21.870+11:002009-12-02T02:15:21.870+11:00i have to say coffee (espresso style) is usually v...i have to say coffee (espresso style) is usually very bad in the US, including NY. Maybe Zibetto (midtown) is the closest thing to a real espresso i tasted there.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-69500894937810007202009-12-01T20:23:42.924+11:002009-12-01T20:23:42.924+11:00"Going to Starbucks for coffee is like going ..."Going to Starbucks for coffee is like going to prison for sex. You know you're going to get it, but it's going to be rough." <br />A Hills.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-53247255287000973042009-12-01T15:49:01.252+11:002009-12-01T15:49:01.252+11:00@joe
it is only barely possible to get a good cup...@joe<br /><br />it is only barely possible to get a good cup of coffee in new york. i know -- i live in new york after having lived in seattle, where i am currently visiting. there is an uptown espresso a block from my hotel, and the well trained baristas serve great coffee, consistently, with a friendly unhurried atmosphere. none of these things are thinkable in new york.<br /><br />gorilla is barely drinkable (wildly overrated imho) and stumptown is very good on the west coast but their new york operations have serious problems. i live five blocks from their flagship brooklyn store and every cup i get from them is a different experience. i've had tepid milk in my cappucino more than once. <br /><br />they are the best in the neighborhood though, so people keep coming back. ie there is no real competition.<br /><br />this is to say that there are complicated cultural and economic factors - real estate prices, existence of a young and friendly trainable population, knowledgeable (ie opinionated and snobby) customers and above all a competitive environment - that lead to the flourishing of an independent coffeehouse culture.<br /><br />starbucks is a very strong brand in the new york area - to many people it is synonymous with coffee drinks. many nj mall rats consider it synonymous with civilization itself. never mind that the coffee isn't great. (that's also related to costs -- they intentionally burn their coffee reduce storage costs and reduce the ability of an untrained barista to screw things up.<br /><br />the automated coffeemaking front is interesting. a coffeehouse in brooklyn has a clover machine and it produces a tidy cup of coffee with no expertise whatsoever. it's not bad, more interesting than good, but i take it over stumptown sometimes.<br /><br />i venture that automated home food production (ie specialty stoves that cook food for you, monitoring things closely to produce a good result) is going to be a big growth industry at some point in the 21st century, but i don't know when.<br /><br />lastly, for good coffee in ny, try abraco on 7th.babar ganeshhttps://www.blogger.com/profile/01898299856773302141noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-41417181663577829002009-12-01T09:16:56.566+11:002009-12-01T09:16:56.566+11:00Marvelous John ... I enjoyed this tale a lot (and ...Marvelous John ... I enjoyed this tale a lot (and learned a lot!). Well told and clear to the point. <br /><br />see you around <br /><br />ClausCVhttps://www.blogger.com/profile/16843402165210120665noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-22637520851402436722009-12-01T05:07:47.737+11:002009-12-01T05:07:47.737+11:00this is the value of knowing exactly what is wrong...this is the value of knowing exactly what is wrong with your thesis... when you don't know what could go wrong is when you should really worry.bleichroederhttp://2and20vision.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-73125166175247923882009-12-01T04:29:17.718+11:002009-12-01T04:29:17.718+11:00I believe that I have a little insight on the Amer...I believe that I have a little insight on the American coffee market. I have consumed vast amounts of coffee from both Starbucks (and related brands) as well as independent coffee shops. In fact in Seattle I lived near Vivace, a famous US coffee house. While in Seattle I split my coffee consumption between Starbucks (on my way to work, usually at the first Starbucks in Pike Place Market) and a variety of other coffee shops (all other times). I really enjoy sitting in a coffee shop and working.<br /><br />However sitting in San Jose there are very few good coffee shops and I would have to drive out of my way to go to one. I think that if you look at the other businesses around a coffee shops you can learn a lot. The independent coffee shops that I enjoy are typically found amongst collections of other small businesses, usually in larger and denser cities. Starbucks can be found in large cities also usually near the major business areas (where other larger corporate establishments are found) but Starbucks are also in strip malls in the county. Given American commute patterns I don't find it strange that Starbucks flourishes in America as opposed to the rest of the world. I think that not everyone in America is able to appreciate a finely crafted cup of coffee and those that are and are willing to wait for it are typically found in great enough density in cities to support a coffee shop.<br /><br />Sorry for rambling, I haven't had my coffee yet. :-)Stevehttps://www.blogger.com/profile/04236553617779545488noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-35051741396745655712009-11-30T23:36:32.438+11:002009-11-30T23:36:32.438+11:00This is fascinating. Thanks for the post-mortem--...This is fascinating. Thanks for the post-mortem--I don't know if you have learned more from your failures than from your successes, but I certainly have.<br /><br />Kudos to you for being brave enough to write it up.But What do I Know?noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-34787962991965725272009-11-30T16:09:16.274+11:002009-11-30T16:09:16.274+11:00John
very good post! And good introspection of the...John<br />very good post! And good introspection of the shorting dynamics...but...<br />do not forget Australians have learned how to make coffee the "Italian way" ( freshly grounded, machine skills required etc...) well before Starbucks started putting Australia on the map.....Frankly why would your friends in Bronte trade down to a Starbuck...?<br />Also I would argue that "unskilled" labour do not qualify by definition to work behind a coffee machine (in Australia). You rarely see the "temp" behind the machine in Sydney. He's either the owner or a long-term employee... So it's not the wage structure the factor, but simply the local product is different(and better..sorry guys in NY). <br /><br />Said that, you may be interested to know that Nestle's capsules ( seemingly on a separate patent) in the US cost the same (55 cents) as K-cups.... and Kraft (Tassimo) and Philips+Sara Lee (Senseo) charge even less....So perhaps where the fraud did not work, competition will...in the long term... <br />http://www.businessweek.com/globalbiz/content/mar2009/gb20090324_886251.htm<br /><br />Hope to catch up with you soon in Bronte ...maybe for a coffe ?<br />Alex BAlex Bnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-77436539958062491512009-11-30T15:01:23.551+11:002009-11-30T15:01:23.551+11:00Investing is nothing like Texas Hold 'em.
In ...Investing is nothing like Texas Hold 'em.<br /><br />In Teaxas Hold 'em, you get 7 cards, with three opportunities to bet. Two face down, the flop, the turn, and the river. 7 cards max, and the hand is over for good. <br /><br />In the "game" of investing, a "hand",... an investment in real a company, you get more like 7,000 "cards". <br /><br />anon.... Bob Dobb.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-82656676593269306772009-11-30T09:23:25.959+11:002009-11-30T09:23:25.959+11:00This comment has been removed by the author.Mike Thttps://www.blogger.com/profile/02533667143855420661noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-75932289920476324222009-11-30T09:13:50.155+11:002009-11-30T09:13:50.155+11:00John,
An excellent post, and interesting that Gree...John,<br />An excellent post, and interesting that Green Mountain was the best performing stock of the last decade according to Crossing Wall Street - http://www.crossingwallstreet.com/archives/2009/11/top_stocks_of_t.html<br /><br />As the promoter of the Texas Holdem Investing theory of investing education I find it encouraging as to how you describe money management as providing the opportunity to "make bets" on a hypothesis regarding the real world.<br /><br />Texas Holdem Investing gets the investor to try to frame each investment as a thesis and play the investment out based on how the security evolves relative to the thesis.<br /><br />Rather like forming a thesis based on your pocket cards in Texas Holdem and then playing the flop, turn, and river based on how the rest of the game plays out relative to your thesis.<br /><br />John, you seem to have played your Green Mountain game well, because although you may have mistakes early in the game you got out quickly after the real world evolved differently to your thesis. Many lesser investors would have stayed in the game and significantly increased their ruin probability.MaskedFinancierhttps://www.blogger.com/profile/05872441333512631659noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-81680954002369209852009-11-30T09:08:16.363+11:002009-11-30T09:08:16.363+11:00John,
The explanation I've read for the failu...John,<br /><br />The explanation I've read for the failure of Starbucks in Australia was that Australia has a relatively large Italian population, and these Italian-Australians brought with them some of Italy's coffee culture. <br /><br />Regarding short selling, I e-mailed you last week about my company's new short selling site. In the event my e-mail ended up in your spam file, I'll reproduce it here below.<br /><br />My company has launched a new site, <a href="http://shortscreen.com/" rel="nofollow" rel="nofollow">ShortScreen.com</a>, which offers tools and ideas for short sellers, including a tool that screens for companies whose Altman Z-scores predict bankruptcy. It might be of interest to those of your readers who short stocks or buy puts on them as part of their overall portfolio strategy.<br /><br />If you become an affiliate, your readers will get a discount on the regular membership fee, and you will get recurring referral commissions on every premium member you refer to the site. The whole process would be seamless for you. For more details on the affiliate program, you can click here: <a href="http://shortscreen.com/become-an-affiliate" rel="nofollow" rel="nofollow">http://shortscreen.com/become-an-affiliate</a>. <br /><br />Feel free to e-mail me if you have any questions or would like more info.<br /><br />Thanks.Davehttp://shortscreen.com/noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-74204588627486921792009-11-30T05:34:23.257+11:002009-11-30T05:34:23.257+11:00Fascinating blog post (as well as commentary).
Co...Fascinating blog post (as well as commentary).<br /><br />Competition in SBUX country is so keen that a small start-up chain resorted to baristas in g-strings. Needless to say, the evangelicals (small minority) in godless King County want them shut down. The politicians are claiming the tips (much more than the cost of a latte) aren't being taxed.Buzzed In King Countynoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-19151432393167800492009-11-30T02:44:55.900+11:002009-11-30T02:44:55.900+11:00Great post. But do you really think those machines...Great post. But do you really think those machines make good coffee? We have one in the office, and even though it's free, nobody uses it. Which shows 2 things -- 1. the cafes in NYC are getting pretty good (have you tried Gorilla or Stumptown?). 2. Coffee is as much a ritual as a beverage, and people like going out into public to fetch it. Particularly if it means getting away from their desks.G4Chttps://www.blogger.com/profile/10301174497525816918noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-74847753630011626522009-11-30T01:46:31.847+11:002009-11-30T01:46:31.847+11:00Lovely post!Lovely post!Sajalhttps://www.blogger.com/profile/09709420216856464366noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-73275340829544773022009-11-29T13:30:11.035+11:002009-11-29T13:30:11.035+11:00This is a sidebar, but the founder of Diedrich (Ma...This is a sidebar, but the founder of Diedrich (Martin Diedrich) has since started a fantastic small chain of coffee shops (Kean Coffee - <a href="http://www.keancoffee.com/" rel="nofollow" rel="nofollow">http://www.keancoffee.com/</a>). I met him one day when he was wiping down his own tables. <br /><br />He told me that he basically was pushed out of the operations of the business by the investors and ended up with a minority share and no control over operations.<br /><br />If you're ever in Orange County, CA try to visit his coffee shop. It's both popular and very good.Unknownhttps://www.blogger.com/profile/10752049250519654110noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-38309113810402064782009-11-29T07:33:55.327+11:002009-11-29T07:33:55.327+11:00Fascinating article, John. We learn the most from...Fascinating article, John. We learn the most from our mistakes.David Merkelhttps://www.blogger.com/profile/05073877918072914309noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-88081903169602059572009-11-29T06:51:50.751+11:002009-11-29T06:51:50.751+11:00John:
Have you considered the possibility that GM...John:<br /><br />Have you considered the possibility that GMCR is using the contract with D to manage their own revs/earnings and can't afford to have any chicanery exposed by a sale of D to an outside party?Anonymousnoreply@blogger.com