Starbucks vs. Green Mountain

Green Mountain Coffee Roasters
Green Mountain Coffee Roasters (Photo credit: Majiscup – The Papercup & Sleeve)

Sept 21

Money can’t buy happiness but it can buy coffee which is the same  thing.

                                                        Jack A. Bass ( The Real Mr. Coffee )

Green Mtn. Coffee (GMCR : NASDAQ : US$27.89)

Starbucks (SBUX : NASDAQ : US$51.14)

Starbucks is setting up to battle with its new Verismo coffee and espresso makers that could pose a threat to brewers from Green Mountain Coffee Roasters and Nestle , the dominant players in the $8 billion single-serve coffee market.

The basic Verismo is available in two models and will sell for $199 for the basic version and $399 for a larger version, with temperature controls and self-cleaning. The prices were in line with analysts’ expectations. According to the latest press release, retail sales are set to begin in October.

This presents a  pretty big threat to Green Mountain’s Keurig, which controls one-cup coffee brewers control more than three-quarters of the U.S. market. Meanwhile Nestle’s Nespresso espresso makers hold a 35% share globally, with a heavy concentration in Europe.Green Mountain’s new Keurig Vue coffee brewer sells for around $250, while Nespresso machines can cost anywhere from $130 to $700.

A Wall Street Analyst points out that this announcement does not include anything new, rather he believes that Green Mountain was under pressure because the market was not expecting Starbuck’s to meet its October launch target.

 That said, Starbucks appears to be a very real threat as it already has a 15% of the K-cup market, via a partnership with Green Mountain under which Starbucks provides coffee-filled K-cups for use in Green Mountain’s Keurig machines . 

Green Mtn. Coffee – Update

Green Mountain Coffee Roasters
Green Mountain Coffee Roasters (Photo credit: Wikipedia)

Green Mtn. Coffee (GMCR : NASDAQ : US$24.34)

August 21
Green Mountain Coffee Roasters presented last week at Canaccord Genuity’s 32nd Annual Global Growth Conference.

Consumer Products Analyst Scott Van Winkle says that the presentation was essentially a detailed expansion of the trends, strategy and developments discussed on its recent Q3 call. Investor focus was on the company’s K-cup and distribution channel strategies, including its new tiered pricing plan with the entry of 8 O’Clock Coffee this fall and continued distribution growth in supermarkets.

The roll-out of the new Vue brewer platform was also discussed, including a 2013 introduction of two additional versions of the brewer at price points that should drive higher share of new brewer sales (Vue was 2% share in its first full quarter of availability at a $250 price point. With management’s messaging and forecasting methodology improving, Van Winkle believes the consistency of results (vs. guidance) will continue to improve. He believes the next several quarters are of heightened importance, not only because of seasonal holiday implications, but also because they will provide the first glimpse into performance post-patent expiration in September.

Van Winkle believes revised guidance, predicated upon 15% share of private label (vs. traditional ~10% range), is adequately risk adjusted at this point. This assumption may be wrong, positively or negatively, but he believes GMCR management is rebuilding some investor confidence after discussing its new forecasting methodology in detail.

He  remains bullish on shares of GMCR, expecting several years of strong revenue and earnings growth driven by rising penetration of Keurig single cup coffee makers in North American households.

Peet’s Coffee and Tea / Starbucks Takeover ?

Peet's Coffee and Tea
Peet’s Coffee and Tea (Photo credit: aroslis)

Peet’s Coffee and Tea (PEET : NASDAQ : US$75.40)
Starbucks (SBUX : NASDAQ : US$45.28)

August 1

Shares of Peet’s Coffee & Tea have been trading above the $73.50 per share bid received from Joh. A. Benckiser last week, as it appears investors think the company could be sold at a higher price.

Some analysts believe that Starbucks could be the one to throw in a counterbid. While rising coffee prices have hurt the bottom and top line of several coffee products, Peet’s managed to boost sales in supermarkets by 30% in 2011 as customers continued to snap up its gourmet
coffee offerings. One Wall Street banker said Peet’s would give Starbucks “an entrée into the gourmet market” and that “if
you’re going to get a counterbid, you’re going to get something that has the appearance of a knockout counterbid.”

Another brokerage notes that by purchasing Peet’s, Starbucks would be able to prevent Peet’s from expanding its coffee shop footprint.
The brokerage went on to say that Peet’s “is perceived as a more premium offering than Starbucks on the grocery shelf, and
they have been able to charge $1 more per 12-ounce bag on the grocery shelf.” Starbucks could use its existing distribution
channels to roll out Peet’s products in grocery stores and its own coffee shops, specifically internationally.

Starbucks has struggled to penetrate the European market, and offering a completely separate brand may help the company gain traction. In
addition to Starbucks, JM Smucker (SJM), maker of Folger’s coffee, and Kraft (KFT), which makes Maxwell House, may also be interested in buying Peet’s.

Starbucks Bucks Recession Wiith Expansion

Starbucks Chairman Howard Shultz talks to the ...
Starbucks Chairman Howard Shultz talks to the media at the Vancouver Waterfront Station location, celebrating 20 years of Starbucks in British Columbia. (Photo credit: Wikipedia)

July 16

Starbucks (SBUX : NASDAQ : US$53.60),

Frappucinos to rescue  the U.S. job market? 

Starbucks on broke ground on a $172 million manufacturing plant in Georgia on Friday that will create more than 140 jobs in the state. The Seattle coffee chain announced in March that the facility will make Via instant coffee and ingredients for Frappucinos sold in Starbucks outlets and in grocery stores, taking over operations handled by third-party plants in Latin America. Starbucks is working to broaden its business as it faces growing competition from rivals like McDonald’s (MCD) and Dunkin’ Brands (DNKN).

 Last month, Starbucks said that it plans to open its first Tazo tea shop this fall in another move to expand beyond its namesake coffee shops and earlier this year said it will open its first Evolution Fresh juice store.

About 75% of the Georgia plant’s workers will be maintenance and engineering technicians,roasting operators, packaging operators and others. The remaining 25% of the workforce will include management and administrative staff. Aside from 140 manufacturing plant jobs, the project will means jobs in construction and shipping.

 Starbucks said the Georgia plant will be its fifth U.S. manufacturing facility and should be completed by early 2014.