TASTE HOLDINGS LIMITED - Taste signs exclusive licence with Starbucks Coffee Company and Withdrawal of Cautionary Announcement

Taste signs exclusive licence with Starbucks Coffee Company and Withdrawal of Cautionary Announcement

TASTE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2000/002239/06)
Share code: TAS ISIN: ZAE000081162
("Taste” or “the company")

TASTE SIGNS EXCLUSIVE LICENCE WITH STARBUCKS COFFEE COMPANY AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT

Introduction

The board of directors of Taste (“Board”) is pleased to announce that Taste
Food Franchising Proprietary Limited (“TFF”), a wholly-owned subsidiary of
Taste, has signed an exclusive development agreement to develop Starbucks
Coffee Company (“Starbucks”) outlets in South Africa.

For the first time in sub-Saharan Africa, Starbucks will open full-format
stores bringing the entire range of its food and beverages, including its
ethically-sourced Arabica coffee, to South African consumers.

“We are proud to be bringing Starbucks to South Africa next year,” says Kris
Engskov, president, Starbucks EMEA. “Working with Taste, our partner, we’re
going to deliver a great Starbucks experience. The coffee market here is
vibrant and growing fast – we want to be part of that growth, bringing the
passion and energy of this remarkable country into the design of our first
store and our first barista team. We can’t wait to get started.”

“We are very excited to be Starbucks partner in Southern Africa. As we’ve
visited numerous Starbucks markets and partners around the world we’ve come
to realise that we share similar core values, including a commitment to
localisation and uplifting both direct and indirect partners,” explains Carlo
Gonzaga, CEO of Taste. “Starbucks supports the development of local suppliers
and is fully committed to our Changing Lanes program wherein we have provided
employment to previously unemployed people and expose them to global training
initiatives and skills. Overall we’re a good partnership match.”

About Starbucks

Since 1971, Starbucks Coffee Company has been committed to ethically sourcing
and roasting high-quality Arabica coffee. Today, with more than 22 000 stores
around the globe, Starbucks is the premier roaster and retailer of specialty
coffee in the world.

“Young people are the key to our success,” says Engskov. “The majority of our
workforce is aged between 17 and 25, so talented youth has always been a
priority and we will equip our new partners with the skills necessary to
succeed in today’s economy. We look forward to using our partnership to
leverage Taste’s strong track record of creating jobs and developing great
people.”

“Starbucks sources a considerable amount of its global, high-quality coffee
from farms in sub-Saharan Africa, in partnership with our network of farmer
support and agronomy centers in Ethiopia, Rwanda and Tanzania. We are proud
to be able to offer some of the best African coffees in the world to more
customers in the Southern African region.”
Salient details

The license agreement gives Taste the exclusive rights to develop Starbucks
outlets in South Africa. As Taste is the licensee, it will own and operate
the stores directly. Including renewal options the agreement is for 25 years
and includes certain rights for other African countries, subject to certain
conditions.

The partnership will see direct job creation opportunities as each Starbucks
store opens, in addition to opportunities at the Taste support office in
Johannesburg.

Rationale

   -   Licensing a global category leader such as Starbucks is in line with
       Taste’s stated strategy of being custodians to the world’s leading
       brands.
   -   Starbucks operates a licensee model that supports Taste’s intention to
       own corporate stores, as it is doing in other licensed relationships.
   -   As Taste will distribute the vast majority of the products directly to
       the stores, the company will benefit from the increased volume through
       its distribution centres.
   -   The rights, subject to conditions, for Taste to develop Starbucks in
       other African countries are aligned with its ambitions to grow into
       select African countries.
   -   The functional requirements of Starbucks align well with the shared
       services platform that has been created in the Taste food division in
       the last two years.
   -   Starbucks has a mature and highly leveragable digital platform that
       aligns with Taste’s strategic view that digital customer engagement is
       a key component of future success.
   -   Starbucks is one of the few truly global brands that is not represented
       in Southern Africa and this addition to the Taste portfolio complements
       its licensed portfolio, which currently includes Domino’s Pizza in the
       food division and watch brands such as Rolex, Omega, Breitling, Tag
       Heuer, Hublot, Rado and Longines in its luxury goods division.

Impact on Taste

As with Domino’s Pizza and other greenfields operations, Taste has and will,
incur once off costs relating to establishing the Starbucks business in South
Africa.   These costs will include training and travel costs prior to the
first store opening, pre-opening marketing and market research expenses as
well as establishing IT and other infrastructure.

Withdrawal of cautionary

Following the release of this announcement shareholders are advised that
caution is no longer required when dealing in the company`s securities.

14 July 2015

Sponsor
Merchantec Capital

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