QUOTE AND NEWS
Forbes  45 min ago  Comment 
Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Keurig Green Mountain Inc (NASD: GMCR), where a total volume of 65,400 contracts has been traded thus far today, a contract volume...
TheStreet.com  4 hrs ago  Comment 
NEW YORK (TheStreet) -- Shares of Keurig Green Mountain are falling, lower by 3.69% to $116.73 in late morning trading Thursday on heavy volume, after the coffee company had its price target slashed by analysts at Buckingham Research and CLSA...
Forbes  4 hrs ago  Comment 
In early trading on Thursday, shares of O'Reilly Automotive (ORLY) topped the list of the day's best performing components of the Nasdaq 100 index, trading up 6.5%.  Year to date, O'Reilly Automotive registers a 6.6% gain.
Benzinga  5 hrs ago  Comment 
Despite a negative investor reaction to Keurig Green Mountain Inc’s (NASDAQ: GMCR) earnings report Wednesday, analysts at Morgan Stanley and UBS believe that near-term challenges will be outweighed by the longer-term opportunity. Bank of America...
Motley Fool  Feb 4  Comment 
The home-beverage specialist fell well short on its holiday-quarter results and expects more headwinds ahead.
Benzinga  Feb 4  Comment 
Keurig Green Mountain Inc (NASDAQ: GMCR) shares fell in Wednesday's extended session after the coffee-machine maker missed first-quarter estimates and offered a disappointing outlook. Keurig also posted first-quarter adjusted earnings of $0.88...
TheStreet.com  Feb 4  Comment 
NEW YORK (TheStreet) -- Shares of Keurig Green Mountain Inc. are down by 7.43% to $112.20 in after-hours trading on Wednesday, following the company's fiscal 2015 first quarter results which fell short of analysts' expectations. For the most...
Clusterstock  Feb 4  Comment 
Keurig Green Mountain just reported first quarter earnings and the company's sales during the quarter were a big miss.  In the first quarter, revenue totaled $1.39 billion, missing Wall Street expectations for $1.5 billion. The company...
Benzinga  Feb 1  Comment 
On CNBC's Options Action, Carter Worth shared his analysis of Keurig Green Mountain Inc (NASDAQ: GMCR) with the audience. He showed on a chart that the stock moved sharply on earnings reports in the last five reports. It managed to beat earnings...




 

Green Mountain Coffee Roasters (NYSE: GMCR), headquartered in Waterbury, Vermont, provides premium, specialty coffees and coffee products. GMCR operates in two business segments: Green Mountain Coffee Roasters (ground coffee and coffee beans) and Keurig (the "one-cup coffee brewer"). In the past fiscal year, the firm has profited from the increased popularity to its Keurig business. However, coffee bean prices, the primary commodity input for GMCR, rose 72% in 2010,[1] which caused the firm's profit margin to decline 15%.[2]


Business Overview

In the past fiscal year, the success of the Keurig brand has driven GMCR sales, as the firm saw an 81% sales growth in its Keurig products.[2] Coffee prices have been surging since January 2010, causing GMCR profit margins to further tighten.

Trends and Forces

GMCR Profit Margins Pressured by Coffee Bean Prices

Green Mountain Coffee Roaster has a high dependence to its primary raw material: coffee beans. As the price of coffee beans, typically imported from Latin and South America, Southeast Asia, and Africa, rises, GMCR needs to pass these costs to consumers or create a more efficient production process to avoid lower profit margins.

Keurig's Niche Product Drives New Revenue Streams

Green Mountain Coffee owns the Keurig one-cup coffee maker business -- a niche product in an industry traditionally composed of coffee pot brewers and cafes. As the one-cup style of coffee making gains popularity, the firm can leverage its brand recognition to expand the business. For example, when GMCR announced it will sell Starbucks (SBUX) coffee in Keurig's patented K-Cup, the firm's stock increased 41%.[3]

Competition

GMCR's competitors include:

  • Starbucks (SBUX): The world's top coffee seller by revenue, Starbucks also sells in-house brewed coffee and other food products.
  • Peet's Coffee & Tea (PEET): Similarly to Starbucks, PEET focuses on its in-house brewed coffee.
  • Dunkin' Donuts (privately held): Sells coffee and tea products, but doughnuts and food products as well.
  • The Folger Coffee Company: Like GMCR, Folger sells coffee beans and ground coffee to be brewed at home.

References

  1. Commodity Online, "Global coffee prices to go high on 2011," 12/23/2010
  2. 2.0 2.1 GMCR 2010 10-k
  3. Seeking Alpha, "A Nasty Week and a Highly Caffeinated Short," 03/11/2011
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