Green Mountain Coffee Roasters (GMCR)

Competition

The specialty coffee market is highly competitive and fragmented and we compete against larger companies that possess greater marketing and operating resources than the Company. The primary methods of competition in the specialty coffee market include price, service, product performance and brand differentiation. The Company competes against all sellers of specialty coffee, including Dunkin’ Donuts^®, Peet’s, Starbucks^® and other competitors. In the supermarket channel, we also compete with “commercial” coffee roasters, to the extent that we are also trying to “upsell” consumers into the specialty coffee segment. Some multi-national consumer goods companies have divisions or subsidiaries selling specialty coffees. For example, Smuckers distributes both

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Folgers^® and premium Millstone^® and Brothers™ brands, as well as Dunkin’ Donuts packaged coffees by license. Nestle^® markets the premium Nespresso^® single-cup espresso system as well as other less premium coffee brands. In the consumer direct channel, we compete with established roasters such as Gevalia^®, a division of Kraft Foods, as well as with other direct mail companies. In the foodservice, we compete against private label roasters, as well as brands such as Seattle’s Best Coffee^®.

Our Company was the first roaster to sell coffee in Keurig’s innovative single-cup brewing system, and we have established a leadership position in the sale of single-cup Keurig K-Cup portion packs. Other coffee roasters and specialty tea suppliers also participate in the proprietary Keurig system, including: Diedrich, Gloria Jean’s and Coffee People, Timothy’s coffees and teas, Emeril’s ,Van Houtte, Tully’s, Bigelow and Twinings. While to some extent these brands compete against our own Green Mountain Coffee and co-branded Newman’s Own Organics brands or our licensed Caribou and Celestial Seasonings branded K-Cups, they are also subject to a royalty, which is paid to us for each K-Cup shipped. The Company also competes with other single-cup coffee and tea delivery systems, including: FLAVIA^® Beverage Systems (manufactured and marketed by Mars), the TASSIMO beverage system (manufactured and marketed by Bosch and Kraft), the SENSEO^® brewing system (manufactured and marketed by Philips and Sara Lee) and a number of additional single-cup pod brewing systems and brands.

We expect intense competition as we expand into new markets and territories. The Company competes primarily by providing high-quality coffee, easy access to our products, superior customer service and a comprehensive approach to customer relationship management. We believe that our ability to provide a convenient network of outlets from which to purchase coffee is an important factor in our ability to compete. Through our multi-channel distribution network of wholesale and consumer direct operations, with particular emphasis on brand trial through K-Cups, we believe we differentiate ourselves from many of our larger competitors, who specialize in only one primary channel of distribution. We also believe that our product offering is distinctive because we offer a wide array of coffees, including flavored, Fair Trade Certified, and organic coffees. Green Mountain Coffee also offers products that feature licensed brand partnerships, including Newman’s Own Organics, Celestial Seasonings, Caribou, Heifer International, National Wildlife Federation and PBS. We also seek to differentiate ourselves through our socially- and environmentally-responsible business practices. Finally, we believe that being an independent roaster allows us to be better focused and in tune with our wholesale customers’ needs than our larger, multi-product competitors. While our Company believes we currently compete favorably with respect to these factors, there can be no assurance that we will be able to compete successfully in the future.

Competition

Competition

The specialty coffee market is highly competitive and fragmented. The primary methods of competition in the specialty coffee market include price, service, product performance and brand differentiation. The Company competes against all sellers of specialty coffee, including Dunkin’ Donuts^®, Peet’s, Starbucks^® and other competitors. In the supermarket channel, we also compete with “commercial” coffee roasters, to the extent that we are also trying to “upsell” consumers into the specialty coffee segment. A number of large consumer goods multinationals have divisions or subsidiaries selling specialty coffees. For example, Procter & Gamble distributes the premium coffee products Millstone^® and Brothers™, which compete with GMCR, Inc.’s coffee. In the consumer direct channel, we compete with established roasters such as Gevalia^®, a division of Kraft Foods, as well as with other direct mail companies.

Our Company was the first roaster to sell coffee in Keurig’s innovative single-cup brewing system, and we have established a leadership position in the sale of single-cup Keurig K-Cup portion packs. Other coffee roasters and specialty tea suppliers also participate in the proprietary Keurig system, including: Diedrich, Gloria Jean’s and Coffee People, Caribou, Timothy’s coffees and teas, Emeril’s ,Van Houtte, Tully’s, Bigelow and Twinings. While to some extent these brands compete against our own Green Mountain Coffee Roasters^® and co-branded Newman’s^® Own Organics or Celestial Seasonings^® brands, they also are subject to a royalty, which is paid to us for each K-Cup shipped.

The Company also competes with other single-cup coffee and tea delivery systems, including: FLAVIA^® Beverage Systems (manufactured and marketed by Mars), the TASSIMO beverage system (manufactured and marketed by Braun and Kraft), the SENSEO^® brewing system (manufactured and marketed by Philips and Sara Lee) and a number of additional single-cup pod brewing systems and brands.

We expect intense competition as we expand into new markets and territories. The Company competes primarily by providing high-quality coffee, easy access to our products, superior

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customer service and a comprehensive approach to customer relationship management. We believe that our ability to provide a convenient network of outlets from which to purchase coffee is an important factor in our ability to compete. Through our multi-channel distribution network of wholesale and consumer direct operations and our “AFH to AH” strategy, with particular emphasis on brand trial through K-Cups, we believe we differentiate ourselves from many of our larger competitors, who specialize in only one primary channel of distribution. We also believe that our product offering is distinctive because we offer a wide array of coffees, including flavored, Fair Trade Certified™, and organic coffees. GMC also offers products that feature licensed brand partnerships, including Newman’s Own Organics, Celestial Seasonings, Heifer International, National Wildlife Federation and PBS. We also seek to differentiate ourselves through our socially- and environmentally-responsible business practices. Finally, we believe that being an independent roaster allows us to be better focused and in tune with our wholesale customers’ needs than our larger, multi-product competitors. While our Company believes we currently compete favorably with respect to these factors, there can be no assurance that we will be able to compete successfully in the future.

Competition

The specialty coffee market is highly competitive and fragmented. The primary methods of competition in the specialty coffee market include price, service, product performance and product differentiation. Green Mountain Coffee competes against all sellers of specialty coffee, including Dunkin’ Donuts, New England Coffee, Peet’s, Starbucks, Seattle’s Best and other competitors. In the supermarket channel, we also compete with “commercial” coffee roasters, to the extent that we are also trying to “upsell” consumers to the specialty coffee segment. A number of large consumer goods multinationals have divisions or subsidiaries selling specialty coffees. For example, Procter & Gamble distributes the premium coffee products Millstone^® and Brothers™ in many supermarkets nationwide, which compete with Green Mountain’s coffee. In the consumer direct channel, we compete with established roasters such as Gevalia^®, a division of Kraft Foods, as well as with other direct mail companies.

Our Company was the first roaster to sell coffee in Keurig’s innovative single-cup brewing system, and we have established a leadership position in the sale of single-cup Keurig K-Cup^® portion packs. Other coffee roasters and specialty tea suppliers also participate in the proprietary Keurig system, including: Diedrich, Gloria Jean’s and Coffee People brands, Timothy’s coffees and teas, Van Houtte, Tully’s and Twinings. While to some extent these brands compete against our Green Mountain Coffee Roasters and Newman’s^® Own Organics brands, they also are subject to a royalty, which is paid to us for each K-Cup shipped.

Green Mountain Coffee also competes with other single-cup coffee and tea delivery systems, including: FLAVIA^® Beverage Systems (manufactured and marketed by Mars), the TASSIMO beverage system (manufactured and marketed by Kraft), the SENSEO^® brewing system (manufactured and marketed by Philips and Sara Lee) and a number of additional single-cup pod brewing systems and brands.

We expect intense competition, both within our primary geographic territory, the Eastern United States, and in other regions of the United States, as we expand from our current territories. The specialty coffee market is expected to become even more competitive as regional companies expand and attempt to build brand awareness in new markets. Green Mountain Coffee competes primarily by providing high quality coffee, easy access to our products, superior customer service and a comprehensive approach to customer relationship management. We believe that our ability

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to provide a convenient network of outlets from which to purchase coffee is an important factor in our ability to compete. Through our multi-channel distribution network of wholesale and consumer direct operations and our “by the cup” / “by the pound” strategy, we believe we differentiate ourselves from many of our larger competitors, who specialize in one primary channel of distribution. We also believe that our product offering is distinctive because we offer a wide array of coffees, including flavored, Fair Trade Certified™, and organic coffees. Green Mountain Coffee also offers products that feature licensed brand partnerships, including Newman’s Own Organics, Celestial Seasonings, Heifer International and National Wildlife Federation. We also seek to differentiate ourselves through our socially- and environmentally-responsible business practices. Finally, we believe that being an independent roaster allows us to be better focused and in tune with our wholesale customers’ needs than our larger, multi-product competitors. While our Company believes we currently compete favorably with respect to these factors, there can be no assurance that we will be able to compete successfully in the future.