June 12, 2012

Green Mountain Faces Single Serve Coffee Challenges for the Year Ahead


Share prices this year of Green Mountain Coffee have been on the decline from the highs of last year due to the expiring patents on K-Cups and what this means for the company according to The Boston Globe is more challenges lie ahead. We've been watching the highs and lows here at Single Serve Coffee, but is this really something new? Green Mountain Coffee has been riding out various after market products and knock-off K-Cups this year to still do well and continue to dominate the market.

Also there's the Keurig VUE brewing system introduced this year, and well ahead of the competition directly from Starbucks which should come in the late Fall with an espresso system called Verismo. We love the VUE and have been enjoying the coffees, teas, and other hot beverages it produces, and think consumers will find in the end the new VUE offers something like K-Cups - single serve coffee convenience with a large variety of choices over time.

The Boston Globe article also gives some juicy tidbits on the knock off or un-licensed K-Cups on the horizon aren't that intersting to consumers. Consumers are more interested in higher priced K-Cups that make better coffee.   

"Clearly the consumer isn’t hankering for a low-priced K-Cup," Pinheiro said. "Who is it that’s going to take significant share? Maxwell House, really? Who’s hankering for Maxwell House?"

There's is some interesting notes about Kroger Co., of Cincinnati, one of the largest US grocery store operators, announcing that it would sell its own private-label version of the K-Cup later this year. We expect to see more of these private label K-Cups, but they're not going to have the quality and brands that Green Mountain has acquired over the past 3 years making their penetration into the market insignificant outside of their stores.

Also there's a really interesting tidbit about Lavazza and Green Mountain making a system to make espresso drinks. And the best part? This system that makes espresso drinks is expected to be for sale in limited quantities by the Christmas holidays. What? Is Green Mountain going to have the VUE and this espresso system to go head to head with the Starbucks Verismo by year's end?

We are not going to be all doom and gloom here at Single Serve Coffee about Green Mountain's future and market leadership in single serve coffee. We're pretty sure times can get tough as competition heats up but competition drives innovation and a strive to stay on top. We expect this to be a great year for single serve coffee and we expect more great things from Green Mountain Coffee.

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Posted by Jay Brewer at June 12, 2012 7:43 AM
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