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Green Mountain Coffee Roasters and Keurig Coffee

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Hei Wong

on 14 November 2013

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Transcript of Green Mountain Coffee Roasters and Keurig Coffee

Green Mountain Coffee Roasters and Keurig Coffee
Introduction & Background
Industry Analysis
Products segments
Sales breakdown
Prepared by:
Megan Pilcher
Avery Purser
Bethany Garner
Hei Wong
Elliott Martin
Introduction & Background
Industry Analysis
SWOT Analysis
Porter's 5 Forces
Value Chain
Financial Analysis
Current Issue
Value Chain
Financial Analysis
Current Issues
Recommendations & Conclusion
History and Background
Where We Are Now
GMCR: Leader in specialty coffee
Keurig: Leading manufacturer of single-cup coffee brewing
Acknowledged for: Award winning coffees, Innovative brewing technology, Environmental and social practices
200 Varieties of K-Cup product offerings
30 Brands
Partnerships with Starbucks and Dunkin Donuts
Where We Are Going…
Continuing expansion of the single-serve beverage category
Pursue growth opportunities leveraging the strength of our Keurig® brewing technology.
Plans to expand into an all-encompassing beverage industry
Purpose, Mission, and Values
Purpose: To create the ultimate beverage
experience in every life we
touch from source to cup-
transforming the way the world
understands business
Mission: A Keurig brewer on every counter and a beverage for
every occasion.

Values: Partner for Mutual Success,
Innovate with Passion, Play to
Win, and We Brew a Better World!
Patented technology
User friendly
Brand Equity
Broad coffee selection
One manufacturer
Can only brew one cup at a time
Water-down coffee
K-cup patents expire soon
The K-cup varieties are too expensive
Expand the Away from Home Market
Expand to more than one Manufacturer
K-cup Technology not recyclable
Keep expanding into consumer homes
Growth in U.S. coffee market
Potential competitors when the patents expire
Intense competitors in its special coffee market
Damaged Reputation
Integrating Acquisitions
Coffee Availability

Research and Development
Financial Management
Human Resource Management
Facilities Management
Marketing and Advertising
Primary Activities
Inbound logistics
Outbound Logistics
Marketing & Sales
Support Activities
Bargaining Power of Suppliers:

Volatile raw material cost: Arabica bean (premium coffee)
Contracts securing price stability with coffee shops
Important inputs
Dependency on specialty farms
Higher demand and prices for premium coffee

Bargaining Power of Buyers:
Dependency of coffee shop chains
Low brand loyalty
Influenced by budget constraints
Differentiated products
Buyers purchase in large volumes relative to the seller sales
Earn low profits

Threat of New Entrants:
Strong brand image
High customer loyalty base
High barriers to entry: High investments
Access to distribution channels
Patent expirations

Threat of Substitutes
Rivalry Among CompetitorsHIGH
Numerous or equally balanced competitors: The Big Three> Starbucks, McDonalds, Dunkin Donuts.
Lack of differentiation. Coffee is a commodity product.
Primary Competitors: Gevalia, Millstone, Peet’s Coffee and Tea, Seattle’s Best
Indirect Competitors: Over 500 smaller and regional brands
Porter's 5 Forces
Threat of Substitutes
US has a huge amount of coffee consumption consumers.
54% of Americans over 18 years old, have anywhere between one and ten cups of coffee a day.
More coffee drinkers means more customers demanding the same quality coffee at a lower price.
Threat of SubstitutesHIGH
When viewed as a source of caffeine, there are some strong substitutes: (RedBull, PepsiCo Products)
If viewed as a warm and soothing drink, there is a medium threat (tea, hot chocolate).
If viewed as a morning beverage, threat is high (juices and milk)
if the Keurig is used for after dinner drinks, threat is high (alcohol).
Threat of SubstitutesHIGH
Esio, Keurig’s newest competitor, works with E-Paks, reusable pouches that can make 14 eight-ounce servings of a drink, served hot or cold.
Average Esio coffee serving costs between 36 and 46 cents. On Keurig.com, K-Cups range from 60 cents to 94 cents per serving in 24-packs.
Threat of SubstitutesHIGH
Companies such as Bunn have come out with a machine similar to Keurig called MyCafe. K-Cups work in this machine.
Customers learning how to “cheat the Keurig system”.

K-Cups are currently not recyclable.
Some of the K-Cup portion pack technology is going to expire in 2017.
Many defect complaints have been detected.
Green Mountain Coffee Roaster was established as a small café in Vermont

Formed a public entity and began selling stock at $10.

GMCR acquired KEURIG, Incorporated, a manufacturer of single-cup brewing systems.

Leader in specialty coffee industry

Business Description
Growth through acquisition
Single-serve coffee is fastest growing business in the industry
Manufacturing company
Coffee, tea, and hot cocoa.
Employing 1,600 people nationwide.
Various locations
Impact on society
1. Products to become biodegradable
2. Expand from one manufacture
3. Product differentiation
Full transcript