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67 Coronga Crescent, Killara NSW 2071 5 November 2007 The Marketing Manager (02) 9584 5444
Saeco
International Group (Australia)
Pty Ltd
(02)
9533.6633
Riverwood NSW 2210
c.c.
Ms. Rebecca Gibson * Invitation for Saeco Australia to – (i) build upon extensive exposure that Saeco previously gained through sponsoring international cycling (ii) re-create a niché in the burgeoning recreational bicycle sport in Australia (iii) benefit from cyclists' penchant for visiting cafés, by re-releasing a distinctive red Saeco club jersey with an initial order of 60 jerseys purchased at full cost by Muggaccinos.com * When Muggaccinos' cyclists visit over 40 different cafés on Sunday rides in Sydney, resplendent in Saeco jerseys, a seasoned Muggaccinos' cyclist would distribute a Saeco marketing card to the café staff * By featuring the Saeco club jersey on Saeco.com.au, where the jersey manufacturer could readily substitute the name of different ride clubs/group, a dozen or more other different bicycle clubs/groups across Australia could be wearing a Saeco jersey as their club jersey within 2 years at no cost to Saeco International Group (Australia) Pty Ltd * Upon the Writer satisfying agreed Conditions Precedent, $1,000 once only Sponsorship Fee for Muggaccinos to wear 60 Saeco bicycle jerseys on each 100km (ave) Sunday ride and mid-week rides for 2 years and distribute Saeco marketing cards * 30 Muggaccinos cyclists wearing the Saeco jersey would be available for photo shoot for an advertising campaign that Saeco wanted to run I understand that Ms. Rebecca Gibson recently commenced working with Saeco International in Sydney. I met Rebecca when she worked at Bicycle NSW when I assisted her on a marketing initiative which went well. I haven't contacted Rebecca regarding this letter because I didn't want to conflict her. However, I welcome you showing this letter and the 3 Annexures because Rebecca could opine on the rational herein of whether a dozen or more bicycle groups across Australia, particularly those which frequent cafes to enjoy coffee, would want a bright Saeco jersey as their club jersey (with their club name appearing on it instead of Muggaccinos.com) provided they could purchase quantities as small as 25 jerseys, at approx. 30% less than attempting to design their own jersey for that small quantity. A cycle jersey manufacturer in Qld who has quoted lower than 6 other quotes that I have obtained which can produce in small lots at 30% less. Within 2 years, a dozen or more other cycle clubs/groups across Australia could be wearing Saeco cycle jerseys with their club name on it at no cost to Saeco which would be very cheap marketing of Saeco coffee machines to both cafe baristas and coffee aficionados. This invitation contains about 15 URLs. It is particularly necessary to click on the URLs to the 3 Annexures referred to below. Click on or access http://muggaccinos.auswide.net.au/muggaccinos/Warm_Fuzzy/CycleJersey/Saeco/Letter.htm 1. Background Muggaccinos bicycle group has existed for 12 years. Its website has >47,000 Hits to the Home Page (see counter at bottom of Home Page) and many more Hits on each week’s Ride Description Invitation pages. Their cyclists visit over 40 different cafes annually, many listed at Nosh Stops.
2.
Why re-align Saeco coffee equipment with
recreational road cycling for a one-off Sole Sponsor Fee of $1,000 to ensure 60
Saeco cycle jerseys were immediately on display in Sydney? (i) with the burgeoning sport of road cycling where an Australian came 2nd in 2007 Tour de France, and government is clamoring to support due to global warming and obesity; (ii) with a 12 year old bicycle group with a name denoting coffee, namely Muggaccinos, which regularly visits over 40 different Nosh Stops annually who would actively distribute a joint Muggaccinos/Saeco marketing card; and (iii) from re-positioning Saeco back into the increasingly popular cycling niché. The recently completed Tour de France was hugely popular in Australia with Australian, Cadel Evans, coming 2nd by only 23 seconds - second closest finish ever. The Australian Financial Review for 6 Jan ‘06 carried a front page heading "Melbourne measures business cycles in lycra " which 'inter alia' contends that cycling has replaced golf ".....in terms of participation. It is not as time-consuming and a bit more collegiate and social". The glossy Sydney Magazine for April '07 in the SMH ran an article "The Wheels of change" re plans sought by several local councils require significant road and bike path infrastructure. Lots of influential people are committed road cyclists. Cycling is one of the few sports which is materially growing in numbers with more bicycles sold than automobiles. The Lance factor due to a record 7 Tour de France victories has particular influenced a resurgence in road cycling. Mass production and manufacture of high quality bicycles in China has evidenced prices halved over the last 12 years which has facilitated popularity. Global warming meteorologists, politicians and health experts are urging us all to get on a bicycle to – (i) reduce green house gases; (ii) avoid obesity and Type 2 diabetes; and (iii) manage stress and anxiety through regular rigorous recreational exercise in a communal environment which enhances self-confidence. Road cycling has its origins in Mediterranean countries of France, Italy and Spain. Road cyclists are renowned for visiting cafés on their bike rides. Cyclists who ride with Muggaccinos are proud of their ride group, with some cycling 300km a week. Cyclists like to wear a bright, colourful cycle jersey which has a commercial dynamic ambience. This letter invites Saeco International Group (Australia) Pty Ltd to be Sole Sponsor of Muggaccinos Bicycle User Group (affiliated with Bicycle NSW Inc.) who would wear a bright red Saeco bicycle jersey on all Sunday rides and midweek rides for 2 years, contingent upon the Saeco, as Sole Sponsor, paying a once only $1,000 Sponsor Fee upon various Conditions Precedent being achieved to the Sole Sponsor's satisfaction. 3. A few years ago Saeco was a major name in European cycling In the 1990's the Saeco cycle team was famous with Mario Cipollini as its feature cyclist. The Saeco team won the Giro d'Italia in 2003 with Gilberto Simoni, and in 2004 with Damiano Cunego. The Saeco company didn't prolong that sponsorship for 2005, and that team was merged with the Lampre team, forming Lampre-Caffita. Saeco Romer's Hausbäckerei AG then became a successful European team. Hence, Australian road cyclists identify Saeco as associated with cycling. 4. Proposed appearance of Saeco jersey Similar if not identical to previous red Saeco jersey prominently displaying Saeco front and back and across the top of the shoulders. The sides and back would also display a 3cm high Muggaccinos.com (white on red background). The back of the jersey has to be bright and striking colours to be highly visible to motorists. Red and white fulfils that requirement. For the Muggaccinos order of 60 jerseys, the back of the jersey would also display 2½cm high KOMpm.com across the bottom which is another cycle website supported by ardent hill climbers which the writer, Phil Johnston, built and adds additional KOM Climbs to the existing 61 KOM Climbs across Greater Sydney. Clause II. in Section 7 below explains that by displaying on one sleeve the name of a local bike shop and on the other sleeve the logo of the prime bike brand that shop supplies eg Giant or Trek etc, the shop would be induced to carry the jersey and sell it to more cyclists. I haven’t approached any shop, however, Hornsby Cycles and Thornleigh Cycles are preferred as – (A.) Muggaccinos have purchased bikes from them; and (B.) Hornsby is central to Muggaccinos ride starts. 5. Jersey quotes Below are URLs to various jersey manufacturers: Netti Jaggad Cannibal Ground Effect Body Torque and Hot Designs I can provide quotes from Netti (Size Chart, Terms & Conditions), Cannibal (Digital Price List), Hot Designs and Body Torque (Art & Design Requirements, FAQ, Client Feedback, Template), together with an Excel file which summarises aggregate cost for an order of 60 jerseys and per jersey costs for the four manufacturers which have provided a quote. I have recently received a quote from another manufacturer in Qld which has under cut the above prices. It has posted to me two of their jerseys and they are top quality. I can show them to you. 6. This cycle jersey sponsorship is explained on Muggaccinos’ website Business Plan to produce an order of 60 Muggaccinos Cycle Jerseys at Muggaccinos' website foreshadows this proposal to Muggaccinos’ cyclists. It lists the names of 50 cyclists who have already committed to purchase a jersey. 7. Conditions Precedent to Sole Sponsor paying the Sponsor FeeAnnexure “A” [1 pg] is “Conditions Precedent” which must be achieved to the Sole Sponsor's satisfaction prior to it paying $1,000 to be Sole Sponsor of Muggaccinos.com for 2 years.8. Benefits to Sole SponsorAnnexure “B” [1 pg] lists the “Benefits to Sole Sponsor” which include in excess of 200 Saeco jerseys worn by cycle clubs/groups across Australia at no cost to Saeco Australia.9. A joint Saeco/Muggaccinos marketing card Road cyclists are passionate about encouraging more adults into road cycling. This invitation entails seasoned Muggaccinos cyclists distributing 2,000 marketing cards a year which display ‘inter alia’ the Sole Sponsor's brand name, logo, 'phone number and website, as well as listing Muggaccinos.com – see Annexure “C” “Specification for business card size marketing card” [1 pg]. Muggaccinos cyclists have made a hit at more than a few of the cafes we visit, such as The Bridge Café, 2/80 George St Windsor and Aldos Pizza. I would ensure that on upcoming Sunday rides, selected Muggaccinos spokespersons, wearing Saeco jerseys, distributed over the next 12 months marketing cards to each of at least 40 cafés on the outskirts of Sydney. The remainder, being >1,800 cards, would be distributed to prospective cyclists extolling them to check out Muggaccinos.com site. Muggaccinos have gone on 3 or 4 long Weekends Away each year staying at Bundanoon, Cessnock, Gloucester, Picton, Mittagong, Bowral, Wollombi, Patterson, Dungog, Kiama, Berry, Kangaroo Valley and Jamberoo. So we could distribute Saeco/Muggaccinos cards at cafes on Nosh Stops on future cycle Weekends Away. 10. Phil Johnston's credentials (i) Ride Organiser and President of Muggaccinos Bicycle User Group; (ii) Worked for Commonwealth Bank for over 30 years and wrote credit papers to lend between $20m and $100m for urban infrastructure; (iii) Holds an Undergraduate Degree and a Master Degree in Applied Finance from Macquarie University; (iv) Adept at documenting agreements so that all parties know their rights and obligations; (v) Opted to retire at 55 because he can afford to, and he enjoys encouraging others to the joys and mental and physical health benefits of regular, rigorous, challenging, recreational exercise within a collegiate/group environment; and (vi) Has cycled with 7 different visually impaired cyclists on tandems - some >100km rides. 11. Risks of the sponsorship There are over 30 different risks which a bank evaluates before embarking on a partnership venture. These include credit, market, professional indemnity/3rd party liability, and reputation risk. Reputation Risk is about the only pertinent risk. The calibre and track-record of the management associated with any business venture is a high priority. I invite you to meet a few Muggaccinos cyclists as they are stable individuals. You could also meet or phone a few of the 7 blind cyclists that Phil Johnston has cycled with on tandems, who appreciate the bonhomie extended to them whilst riding in Muggs’ 100km+ Sunday rides. Muggaccinos is 12 years old. It will be around for several more. 12. 2nd cycle website for King of the Mountain Climbers 13. Summary Muggaccinos Bicycle User Group invites Saeco International Group (Australia) Pty Ltd to be Sole Sponsor of Muggaccinos Bicycle User Group in accord with obligations noted herein. Compared to the cycle promotion costs that Saeco funded for an international bicycle team competing in the European Cycle Circuit a few years ago, $1,000 for Muggaccinos to wear a minimum of 60 jerseys exclusively for 2 years, plus the cost of 2,000 marketing cards pa, is low for the 14 marketing benefits listed in Annexure “B” “Benefits to Sole Sponsor”. Whilst this invitation undertakes for Muggaccinos cyclists to wear the Sole Sponsor's jersey for 2 years, the reality is that a cyclist will wear a good looking jersey until it falls apart - usually about 5 years. In a few years there could three or four hundred of the Sole Sponsor's bicycle jerseys worn by recreational cyclists from a dozen recreational ride groups across Australia, as lots of ride groups want a good looking jersey. However, the usual one-off costs to design a template for each club/group render it prohibitive. The template for the Sole Sponsor's jersey could be readily adjusted for about $30 per bicycle group/club to incorporate the different name of each bicycle club or recreational ride group who wanted to purchase the Sole Sponsor's jersey, and the different name of the local bike shop which agreed to carry the jersey, in lieu of a new template usually costing $500. The rest of the jersey displaying the Sole Sponsor's brand name and products would remain unaltered. Saeco International Group (Australia) Pty Ltd could market the jersey to interested ride groups on its website. Saeco would not incur any sponsor fee or cost to have a Saeco jersey worn by other clubs/groups. As the above-mentioned AFR article highlighted, cycling has replaced golf as the social exercise activity to pursue due to increased focus on fitness and its collegiate appeal. It is trendy for CEOs, CFOs and politicians to be cycling on Sunday mornings. In a few months, Saeco Coffee Equipment could again be synonymous with cycling and thereby achieve a material sales edge over its Qualifiers by - (A) positioning its brand name with the burgeoning cycling - café frequenting market; and (B) encouraging enhanced fitness, diminished obesity (Diabetes 2), reduced green house gases for Australians to better manage stress and anxiety through the natural therapy of regular rigorous exercise within a collegiate/group environment. 14. Postscript Muggaccinos invites any members of Saeco International Group (Australia) Pty Ltd who live in Sydney to try cycling with Muggaccinos on a Sunday 100km+ ride or participate in our cycle Weekends Away. I welcome your ‘phone call to me 0412 045.224 or reply e-mail to meet with you at Riverwood if you would like to discuss this invitation. Yours sincerely
Phil Johnston |
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