Food & Beverage Distributors

Corporate Overview

Nascent Wine Company, Inc. dba  

Nascent Food Service (OTCBB: NCTW)

Based in San Diego, CA -- Nascent Food Service is the exclusive distributor for Miller Beer in Baja California, Mexico.

However, Nascent Food Service is also a major supplier of many well known U.S. and international food products throughout Mexico, such as Heinz, Del Monte, Peter Pan, Haagen-Dazs, Nestle, General Mills, Ferrarelle Water, Cora Italian Food Products, Bonafont Water, Avasoft Ice Cream, Kabbalah Energy Drink and Jolly Rancher Soda.

Nascent markets and distributes over 2,000 national and proprietary brand food and non-food products to over 1,300 customers.

The Company was founded in 2001 as a result of the combination of several food service businesses, has been a wine distributor since 2002 and a food product and beer distributor since 2006.

The highly experienced executive management at Nascent is earnestly striving to become the leading and more specificly, the first national food and beverage distributor in Mexico.

The Company has grown revenues to over $16 million (12/31/06) through increased sales, new customers and several acquisitions.

As of May 2007, the pending aquisitions/agreements will provide pro-forma revenue numbers of approximately $30 million for the current fiscal year ending December 31, 2007 (not factoring in more significant acquisitions anticipated during the remainder of '07).

Nascent Food Service, Inc. is focused on acquiring the most profitable and well-positioned distributors in Mexico with the best selling product portfolios.

RECENT EVENTS -- (A very active 12-month period)

In February, 2007 Nascent announced the opening of it’s distribution center in Ensenada, Mexico, allowing Nascent to more effectively distribute products in the entire municipality   of Ensenada... from the Pacific Ocean to the Sea of Cortez.

In December 2006, Nascent opened a distribution center in Puerto Penasco, Mexico --making Nascent the only food distributor with a presence in this growing resort community.

Also in December 2006, Nascent signed a Letter of Intent to acquire a Mexico-based food and distribution company that currently covers 95% of the retail grocery and club stores throughout Mexico.

In November 2006, Nascent Food Service completed the acquisition of Palermo Foods, an Italian food import business based in Miami, Florida. This wholly-owned acquisition services Miami, FL, Puerto Rico and Mexico and delivered revenues of over $12 million in 2005.

Again in November 2006, Nascent acquired the assets of JM Distribution, a bakery goods distribution company in Tijuana servicing Tijuana, Mexicali and Ensenada, Mexico.

In June 2006, Nascent became the exclusive distributor of Ferrarelle SpA, Inc. brand beverages in Mexico. Ferrartelle’s brands include Natia, Santagata, Boario, Vitasnella, and Italy’s #1 bottled water, Ferrarelle.

Prior to this aggressive acquisition period was the utimate acquisition of Piancone Group International, Inc. (PGI) in June 2006.

PGI was the family business of Nascent Food Service CEO, Mr. Sandro Piancone, and provides the foundation upon which Nascent is building the first real nationwide food distribution company to service all of Mexico.

(at the time of the acquisition, PGI was already one of the largest food distributors in Baja California, Mexico representing over 1,400 food products)

In May 2006, Nascent Food Service acquired the exclusive Miller Beer Distribution rights for Baja California, Mexico from Baja Miller, a distributor of Miller Beer. The markets served by the exclusive Miller Beer distribution rights, include: Tijuana, Mexicali, Rosarito, Ensenada, La Paz and Cabo San Lucas.

Nascent Food Service's extensive product line and expanding distribution system allows them to service the 3 major foodservice industry customers:

Traditional: independent restaurants, hotels, resorts, cafeterias, schools, bakeries, and industrial caterers

Chains: regional and national family and casual dining and quick-service restaurants like  TGI Friday's, Applebee's, Pizza Hut and Papa John's

Retail (Grocers): 3 of Mexico's largest supermarkets - Calimax, Gigante and Casa Ley, convenience stores AMPM De Mexico and OXXO, and mom and pop grocery stores

THE MARKET

Mexico is the 11th most populated country in the world. It has the 4th largest per capita income in Latin America and has a burgeoning middle-class population.

According to a recent USDA report, Mexico’s hotel, restaurant and institutional food service sector represents $46 billion in sales. The food service sector in Mexico is highly fragmented and significantly underdeveloped.

Additionally, Mexico’s hotel and restaurant businesses, especially in Baja California, are heavily dependent on tourism. In fact, according to a report from Mexico’s Secretary of Tourism, there are approximately 11,618 hotels and over 200,000 restaurants in Mexico.

ATTRACTIVE MARKET FACTS

• Population in excess of 100,000,000.
• Gross Domestic Product (GDP) of more than $1 trillion.
• 90% of all tourists visit from the U.S.
• Approximately 25,000 food distributors, with no single dominate company
• Primarily small-to-medium distributors, with revenues of $1 to $10 million and single product lines.
• Food distributors can't finance or sell their business due to banking rigidity.
• Food service margins in Mexico are 20-40%, versus 10-15% in U.S.
• Rents are 1/2, electricity is 1/3 and payroll is 1/8 the cost of the U.S.
  

Nascent Food Service plans to consolidate the $46 billion foodservice distribution market in Mexico, in much the same way that Sysco has in the United States, by acquiring smaller distributors and expanding into new markets.

Because of the fragmented nature of the foodservice distributor industry in Mexico, it is ripe for consolidation, which will offer massive economies of scale, opportunities for cost reduction, elimination of redundant services, not to mention -- a potentially significant increase in the ease of obtaining inventories and receivables financing.

The food service industry in Mexico is served almost entirely by independent distributors. While some hotels and restaurants import products directly, the number is relatively few and most foreign food products are imported through a distributor. Due to the complex nature of importation and the large minimum order size imposed by most food manufacturers, the intermediary role of the independent distributor is necessary for effective inventory warehousing and delivery.

Moreover, the roads and infrastructure of Mexico make U.S. style, large-scale delivery and logistical methods difficult, necessitating more frequent deliveries using smaller delivery vehicles. These unique logistical challenges poise a significant barrier to large “multi-supplier” U.S. food service distributors in the Mexican market.

Since there are literally no major national food service distributors in Mexico, the industry is divided into three general categories of distributors:

(i) fast food distributors focused on international chains such as McDonald’s, Kentucky Fried Chicken, Domino’s Pizza and Burger King

(ii) specialized importers that serve middle and upper-tier markets and provide primarily foreign food products or products that are not widely available in Mexico and

(iii) produce and basic dry goods distributors that distribute local products and widely-available foreign products.

Of these three categories, the Company believes that the specialized importer delivers the most value and offers the greatest opportunity for profitable growth.

Nascent Food Service, Inc. is fast developing this extraordinary opportunity to become the first national distributor as a specialized importer.

Food service distributors in Mexico rely heavily on their individual owners and there is not an active or competitive market to purchase these companies. Therefore, retiring company owners often terminate their operations as opposed to seeking a buyer.

Also, small distribution companies are under continual financial stress because they must internally finance nearly all of their inventory and receivables... due to consistently limited receivables financing and bank lending in Mexico.

Marketing and Distribution

Nascent Food Service currently has 56 full-time sales people who are responsible for maintaining close contact with customers, visiting them regularly, distributing price lists and introducing new products. The sales staff regularly visits all hotels and restaurants in their territories. In most cases the sales staff collects all payments for products directly from customers since checks are generally not sent through the mail in Mexico. For larger, more institutional clients the senior mgmt. often accompanies sales personnel on marketing visits.

The Company delivers their products using a growing fleet of 26 trucks, including 10 refrigerated trucks, driven by 26 drivers. Nascent supports sales and deliveries by maintaining warehouses in San Diego, Miami, 2 in Tijuana, Cabo San Lucas, Ensenada, Mexcali and Purto Penasco, Mexico.

Information Systems and Accounting

The company believes that prompt and accurate delivery of orders, close contact with customers and the ability to provide a full array of products and services to assist customers in their food service operations are of primary importance in the marketing and distribution process. They offer daily delivery to certain customer locations and have the capability of delivering special orders on short notice.

The Company's sales force maintains close working relationships with customers and provide ancillary services relating to food service distribution, such as product usage data reports, menu-planning advice, food safety training and inventory control assistance.

Over the next decade, Mexico could see U.S. style; “multi-supplier” companies considering to enter this market. However, the company aims to become the leader in this market due to the unique challenges facing leading U.S. distributors such as Sysco, Inc. and U.S. Foodservice, Inc. who may find entering this market directly much too cumbersome.

The top competitive advantages of these major firms are economies of scale and large-scale logistical systems. Since the company believes that those systems may be the most difficult to implement in Mexico, the highly experienced and savvy management team at Nascent Food Services believes that the largest distribution company that is ripe to unfold in Mexico will be the one with a distribution and sales system that has been organically grown from within the vast Mexican market.

Noting such, Nascent Food Services is astutely and quickly consumating acquisitions to position the company as the clearly emerging distribution leader.

A FEW MORE KEY DEVELOPMENTS

• Nascent currently has over 1,000 food service accounts.
  

• Nascent services some of Mexico’s largest corporations, many of which have grown substantially since the opening of NAFTA in 1994.
  

• Strong growth of 7-Eleven & AM/PM stores are replacing local mini-marts.

• 7-Eleven Mexico had 100 stores in 2003, 200 in 2004, and 600 in 2005.

• Nascent is negotiating with 7-Eleven Mexico and sub-distributors to become a key supplier to capitalize on rapid expansion.

• Nascent is already a major supplier to AM/PM stores in high growth markets.

• Nascent has implemented unique sales programs to help fuel the growth of their corporate business.

• Nascent has launched their CORA co-op program with American Express, making them the first food distributor in Mexico to offer such a program.

• Nascent has signed on over 60 participating clients since the co-op launch.
  

Acquisition Strategy

Nascent Food Service is replicating the food service roll-up strategy in Mexico of successful enterprises in the U.S., such as Sysco Foods, U.S. Food Service, and Dean Foods.

They have installed sophisticated technical controls to maintain product flow and accuracy of records.

They have integrated products, purchasing and accounting, and new distribution networks.

They have 3 current offers to acquire these distributors in the current fiscal year:

• Nationwide gourmet food distributor with revenues of $6 million and gross margins of 35%.
• Bakery supply distributor with revenues of $5 million and margins of 21%.
• Soda and snack distributor with revenues of $3 million and margins of 17%.
  

Products & Distribution
The Company distributes over 2,000 food and non-food products, including:

(i) products under a 15-year exclusive distribution agreement with Atlantic International Products, Inc. for the CORA line of over 7,000 Italian foods and condiments,

(ii) a five-year exclusive agreement with Miller Brewing Company for the distribution of Miller beer in Baja California,

(iii) exclusive distribution agreements for Avasoft Ice Cream, Reed Beverages, Ferraralle Water, Cabo Chips,

(iv) proprietary products that they offer under a variety of their own brand names.

Their customers include grocery stores, convenience stores, hotels, resorts, cafeterias, schools, industrial caterers and restaurants and distribute a full line of frozen foods, from meats to fully prepared entrees and desserts to a full line of canned and dry goods.

They also distribute a variety of food-related items like disposable napkins, plates and cups.

Company's Product Categories

• Beverages

• Baking Ingredients

• Condiments and Dressings

• Fresh Meats

• Frozen Foods

• Grocery Products

• Refrigerated Foods

• Specialty Foods

• Disposables

• Candy

• Equipment

• Beer

Nascent purchases all products directly from manufacturers and through other distributors.

Nascent Food Service Locations

International Corporate Office

2355 Paseo De Las Americas
San Diego, CA 92154
Tel: 619-661-0458
Fax: 619-661-9735
Email: spiancone@pianconegroup.com

Tijuana Mexico Distribution Center

Fray Junipero Serra 17501 Fracc. Ciudad Industrial, Garita De Otay
Tijuana, Baja California, 22290

Tel: (011 52 664) 647-5720
Fax: (011 52 664) 647-5739
Email: usalimen@telnor.net

Cabo San Lucas Distribution Center

Best Beer Distributing
Chihuahua esq. con Jalisco
Col. San Jose Viejo
San Jose Del Cabo, Los Cabos, B.C.S.

Office of Corporate Procurement

318 Indian Trace #454
Weston Florida 33326

Tel: 954-349-2220
Fax: 954-349-2029
Email: vpetrone@pianconegroup.com

• Nascent Food Service is quickly becoming the first national Food Service distributor in the history of Mexico

• Nascent food Service currently has distribution centers in San Diego, California, Miami, Florida, Tijuana, Puerto Penasco, Ensenada, and Cabo San Lucas

• Through a pending acquisition Nascent will add distribution centers in Mexico City, Guadalara, and Monterrey

• The Mexico Food Service industry represents $46,000,000 in sales service through 25,000 mostly mom and pop companies

• Nascent is replicating a food service roll-up strategy in Mexico that has been proven in the United States by companies such as Sysco Foods, U.S. Food service and Dean Foods

• Experience key management and operational personnel are in place to execute on the company's agressive business plan

Sandro Piancone, CEO
Sandro Piancone is spearheading Nascent's drive to secure new distributors throughout Mexico as well as the implementation of marketing programs for those distributors. He began his career in the food service business since 1986 as the Publisher of a large industry newspaper. In 1991, he founded Tele-Chef Catering, which grew to one of San Diego's largest catering companies in just a few years. In 1998 he joined Roma Exporting, a major food supplier to Mexico, where he was vice president of sales and marketing. Before launching the Piancone Group in 2003, he was President and Director of E-Food Depot, USA. Inc. He is fluent in Italian and Spanish and is well acquainted with the food service industry market in Mexico, Europe and the USA.

Victor Petrone, President
Mr. Petrone began his foodservice career in 1983 as owner and General Manager of Capital Food Corp. where he developed ethnic dining concepts for quick-service restaurants, formal dining as well as free-standing restaurants. He entered the food distribution sector, Serv-Safe Certified and in 1999 was recruited by Roma Food Enterprises as General Manager of Western US and Mexico to oversee expansion. In 2001 he was recruited by U.S. giant Sysco Foodservice Corp. to oversee its Specialty Market Division as well as business development for international sales, for which he achieved 22% growth annually.

Additionally, in 2004 he formed International Food Specialists Inc., an import export company representing over 70 manufacturers and up to 500 product lines. His sales market includes, USA, Mexico, Canada, The Caribbean, Central and South America. He is a Graduate of The Wharton School of Business; University of Pennsylvania, 1998 and is fluent in English, Italian and Spanish.

William Lindberg, Chief Financial Officer
Mr. Lindberg began his accounting career with Arthur Anderson & Co. in 1958 in Los Angeles. Was assigned to offices in Montevideo, Uruguay, Buenos Aires, Argentina and Santiago, Chile 1961-1971 and has been and preparing financial statements with full disclosures to be included in SEC filings and presentation to auditors since 1998. He had been consulting for Piancone Group International, Inc. since 2004.

Derek Scallet, Chief Operating Officer
Mr. Scallet was formerly a CPA and Manager for what is now KPMG and has 25 plus years experience in engineering companies to optimize their value to their stakeholders: investors, customers, employees, vendors and other creditors.

Mr. Scallet is a CPA and Executive and Strategic Advisor with an extensive background in acquisition, divestiture, restructuring, start-up, and mature operation within production, distribution, and service companies ranging from $10 million regional operations to $1+ billion multinational environments.

His experience includes designing and implementing business/operating plans, developing organization structures and processes, international reporting and management, debt and equity offerings. Focal strengths are enhancing an enterprise's inherent value through optimized strategic plans, team building and leadership across the enterprise, operational and financial solutions within market scope and scale, and goal directed communications both internally and externally.

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