This excerpt taken from the GMCR 10-K filed Dec 14, 2006.
Fiscal year 2006 was a year of accelerated growth as we continued to grow with existing customers, launched our coffee program with new customers in core and non-core markets and increased consolidated net sales with the acquisition of Keurig. Consolidated net sales increased 39.5% in fiscal 2006, to $225.3 million from $161.5 million for the fifty-two weeks ended September 24, 2005. Consolidated net sales for fiscal 2006 includes $207.6 million from GMCR net sales (not including Keurig net sales) and net sales of Keurig of $24.1 million prior the elimination of inter-company sales. The increase in dollar sales was due mainly to strong sales in the office coffee service (OCS), food service and consumer direct channels. Keurigs sales are comprised of brewer and K-Cup sales as well as royalty income from the sales of K-Cups by licensed roasters.
Net sales for GMCR increased 28.5% and coffee pounds shipped by GMCR increased 23.8% in fiscal 2006. The pounds increase was strongest in the food service channel, up 62.3% over fiscal 2005, primarily due to the November 1st roll-out to over 650 McDonalds restaurants in New England and New York where we are selling two varieties of Newmans Own® Organics Fair Trade Certified coffee. The OCS channel increased coffee pounds shipped by 28.9% due to strong K-Cup sales to our key customers driven by continued penetration of the Keurig® Single-Cup Brewers in small offices and the continued success of teas in K-Cups. The consumer direct channel grew over 70% in dollar sales and 44.8% in coffee pounds shipped, due primarily to the sales of K-Cups® to consumers for use with Keurig® Single-Cup Brewers, as well as K-Cup sales to Keurig, for their developing retail and consumer channels. The supermarket channel increased their pounds shipped by 11.1% over fiscal 2005, due primarily to the increase in sales of our Fair Trade Certified and Organic product line including our co-branded Newmans Own® Organics products to new
and existing customers. The convenience store channel increased pounds shipped by 8.2% over fiscal 2005 led by sales to McLane Company, Inc. (McLane), the distributor for ExxonMobil.
Our ongoing strategy will support growth management across all channels in new and existing markets. Geographic expansion is a key component to our growth strategy where we will leverage the acquisition of Keurig® and explore new avenues of growth through traditional and non-traditional channels.
In fiscal year 2006, we reorganized our selling organization to better support customer acquisition and existing customer growth. We now define away from home (AFH) (cup coffee for on-the-go) and at home (AH) (coffee purchased for consumption at home) as our two sales organizations. This reorganization supports customers by coffee occasion and consumption opportunity. By supporting customers where and how they compete, we feel better aligned with growth opportunities for the future and in support of ongoing consumer trends. Keurig® single-cup brewers will continue to represent a significant growth opportunity as we expand distribution of the newest brewers to the AFH channels and continue to increase sales Keurig® single-cup brewers for the AH market.