Swiss Water Decaffeinated Coffee Income Fund Reports Third Quarter 2008 Results

Swiss Water Decaffeinated Coffee Income Fund will hold a conference call
and webcast to discuss 2008 third quarter and nine-month financial
results, and corporate developments on November 12, 2008 at 8:00 am
Pacific Time (11:00 am Eastern Time). To participate, please dial
1-800-814-4853 (toll free) or 416-646-3095 (GTA and international)
approximately five minutes before the call. A replay will be available
through November 26, 2008 at 1-877-289-8525 (toll free) or 416-640-1917
(GTA and international) passcode: 21287972 followed by the number sign.

In addition, a live and archived webcast can be accessed at
http://www.investorcalendar.com/IC/CEPage.asp?ID(equal sign)136980 or on
the company's website at www.swisswater.com

TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN

VANCOUVER, Nov. 10 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund ("the Fund") today reported financial results for the three and nine months ended September 30, 2008. The three-month period represents the third quarter of its 2008 fiscal year. The Fund holds all of the outstanding securities of Swiss Water Decaffeinated Coffee Company, Inc. ("SWDCC" or "the company") and its results are dependent on the operating results of SWDCC.

Operating Results

In $000s except                   3 months ended        9 months ended
 per unit amounts                   September 30          September 30
                                  2008       2007       2008       2007
                              -------------------------------------------

Sales                         $   7,677  $   7,705  $  23,611  $  22,384
Gross profit(1)                   1,472      2,541      5,542      7,940
EBITDA(2)                         1,355      1,518      5,016      4,940
Net income                        1,843      1,240      3,623      4,343
Adjusted distributable cash(2)      934      1,606      5,157      4,940
Distributions paid                1,502      1,502      4,506      4,422
Per unit amounts:
-----------------
Net income per unit               0.276      0.186      0.543      0.651
Adjusted distributable cash
 generated per unit(2)            0.140      0.241      0.773      0.740
Distributions paid per unit(2)    0.225      0.225      0.675      0.662


(1) Gross profit reporting was changed in Q3 2008 to conform to new
    accounting requirements for inventory and cost of goods reporting.
    The change applies to 2008 results only and includes certain overhead
    and plant and machinery depreciation expenses previously reported
    below the gross profit line. The Q1 and Q2 2008 gross profit results
    were reclassified in Q3 2008 to conform to the new requirements.
    Consequently, previously reported gross profit in the first half of
    2008 decreased by $1.9 million.
(2) EBITDA, adjusted distributable cash and adjusted distributable cash
    per unit are non-GAAP financial measures. Definitions of these terms
    can be found in SWDCC's Management's Discussion and Analysis to be
    posted on SEDAR on or before November 10, 2008.


During the third quarter of 2008, SWDCC's processing volumes decreased by
12.1% over the same period last year due to lower toll volumes from two
significant customers. However, in the first nine months of 2008, the
company's processing volumes grew by 4.5% on a year-over-year basis. The
higher sales volume was due to several factors including:

-   a modest order backlog from the fourth quarter of 2007, which was
    related to a customer supply issue. Volume from this customer is up
    by 16% for the year-to-date and down by 11% for the third quarter,
    compared to the same periods last year.

-   the addition of a significant new customer in late 2007, which has
    increased year-over-year demand throughout the first nine months of
    2008

-   strong continuing demand from established customers. This has offset
    an existing customer's decision to discontinue a product and related
    promotion that drove significant toll volumes last year

-   Canadian processing volume increased approximately 25% year to date
    primarily due to the increased investment in consumer advertising

Revenues were flat in Q3 2008 and up by 5.5% in the first nine months of 2008, compared to the same periods in 2007. Nine-month revenue grew at a faster rate than processing volumes due to higher coffee commodity prices, which led to an increase in non-toll revenue. This more than offset lower foreign exchange rates and a less favourable product mix, which pushed SWDCC's average processing revenue rates down for the three and nine months ended September 30, 2008. During the third quarter and first nine months of 2008, 77% and 78% of total revenues, respectively, were denominated in US dollars.

As explained in Note (1) above, a reclassification was made during Q3 2008 to reflect certain fixed costs, which were previously reported below the gross profit line, in cost of goods sold. SWDCC's nine month gross profit, before the reclassification of certain fixed overhead costs of $2.9 million to cost of goods sold, grew by 5.9% compared to 2007. The increase was related to higher sales volumes and lower cost of goods sold and was realized despite lower foreign exchange and higher green coffee costs. Cost of goods sold fell due to a decline in foreign exchange on US dollar denominated input costs. Third quarter gross profit (before the reclassification of certain fixed overhead costs of $1.0 million to cost of goods sold) decreased by 4.3% over the same period last year due to lower processing volumes.

Nine-month EBITDA increased by 1.6%, due to higher processing volumes and lower cost of goods sold. These factors more than offset a $0.4 million year-over-year increase in consumer advertising expense. Third quarter EBITDA declined by 10.7% on a year-over-year basis due to 12% lower processing volumes and increased consumer promotion costs for the period.

During the third quarter, the company's net income increased by 48.6% over the same period in 2007. This was mainly due to the recording of net gains on the derivative financial instruments used to manage SWDCC's exposure to fluctuations in foreign exchange and coffee futures. During the three months ended September 30, 2008, SWDCC recorded net gains of $1.4 million from these sources, up by $0.8 million from net gains of $0.6 million during Q3 2007. During the first nine months of 2008, net income decreased by 16.6% over the prior year, as the gains on derivative instruments fell to $0.8 million compared to $2.3 million for the same period in 2007.

Monthly distributions to unitholders have been maintained at $0.075 per unit since March 2007. During the seasonally slower third quarter, the Fund generated distributable cash of $0.9 million, and paid $1.5 million in distributions to unitholders. In the first nine months of 2008, distributable cash of $5.2 million was generated and $4.5 million was paid to unitholders. This resulted in a payout ratio of 152% for the third quarter and 86% for the first nine months of 2008.

"Historically, the third quarter is a seasonally softer period for the specialty coffee industry. Our volume growth slowed slightly more than expected during Q3 2008, as uncertain economic conditions led to market volatility. Despite this, we met our volume expectations for the first nine months of 2008, and were pleased with our business gains. With net growth from new and existing customers in all segments except our toll business expected to continue, we now anticipate our annual processing volumes will be level with 2007," said Frank Dennis, President and CEO of SWDCC and a Trustee of the Fund. "During the third quarter, we continued to support our multi-media advertising program in Canada and are encouraged by the positive impact it has had on consumers and customers. Today, approximately 80% of the decaffeinated coffee sold in the global market has been exposed to chemical solvents such as Methylene Chloride or Ethyl Acetate. Accordingly, our campaign is designed to inform customers about the comparative advantages of the water-based SWISS WATER(R) Process and to help consumers understand that they can choose 100% chemical-free decaffeinated coffees. We believe the clear communication of this message is behind some of the Canadian business growth we have seen in 2008 and we expect similar results as we expand this important initiative in 2009."

The company also announced that Stan Thompson, CFO of the company, has tendered his resignation effective December 1, 2008. "We thank Stan for his contributions to our company and wish him well in his new career in another industry sector," said Frank Dennis, President and CEO of SWDCC. The company is currently conducting a search to fill the vacant CFO position.

A more detailed discussion of the Fund's financial results can be found in its third quarter Management's Discussion and Analysis, which is to be posted with the Fund's interim financial statements on SEDAR (www.sedar.com) on or before November 10, 2008.

Company Profile

SWDCC is the world's only consumer-branded chemical free coffee decaffeinator, and is certified organic by the OCIA (Organic Crop Improvement Association).

SWDCC decaffeinates customer-owned coffees, including organically certified coffees, for a toll fee. The company also purchases high-quality green coffees from more than 10 different countries, decaffeinates them and markets them to the green coffee trade. These two revenue streams are known as the company's "toll" and "non-toll" businesses, respectively.

As of September 30, 2008 approximately 53% of SWDCC's revenue came from customers in the US, 33% from Canada and the balance from international markets, including the United Kingdom, Japan and Australia. Consistent with most global, commodity-based businesses, the bulk of the Fund's revenues are denominated in US dollars.

%SEDAR: 00017658E