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Green Mountain Scaled by Starbucks in Single-Serve Coffee Battle

Posted by Dale Buss on September 20, 2012 10:01 AM

Green Mountain Coffee is in a pot of trouble. And that's even before Starbucks introduces Verismo, its own single-serve brewing system for consumers that's rolling out in October (and already available on Verismo.com), to challenge the iconic K-Cup system by Green Mountain that features its Keurig pods. 

The brand has been a darling of consumers for several years, on a continued growth tear as K-Cups led a revolution in how Americans consume much of their coffee by making the single-serve system de rigeur in homes and offices. The company fed strong double-digit sales growth by continuing to proliferate the types of pods, to include "iced" drinks and juices as well as coffees and teas.

Green Mountain also had been a darling of investors seeking to cash in on a boom that, for the six years after the Vermont-based company acquired Keurig, managed to thrive without attracting the competitive interest of Starbucks.

The worm began to turn late last year after some accounting irregularities surfaced, investors began to lose confidence, Green Mountain missed some sales projections, and its stock price began a slide that has amounted to about 70 percent over the last 12 months.

CEO Larry Banford isn't just sitting around shaking about any further damage that might result once Starbucks actually plunges into Green Mountain's market this fall. "We're still talking about [annual] sales growth in the 15 percent to 20 percent range," he told the Wall Street Journal. "There are very few other companies in the consumer packaged goods or beverage world or appliance world that are growing at a 15 percent to 20 percent rate. Most are growing at GDP plus a point or two and when they do that they're giving themselves high fives."

To try to keep the growth going as Green Mountain attempts to push through increasing competition and investors' doubts, the brand is innovating with new products such as Keurig Vue, which Blanford said "has been designed with more flexibility to accommodate a wider range of beverages beyond coffee, including cold beverages.

Green Mountain also has introduced a new six-product line called Wellness Brewed, which includes two coffee products, an Antioxidant Blend and a Focus Blend, meant to provide added -- and nutritional -- functionality beyond coffee's caffeine boost. The first includes extra vitamins C and E; the latter includes the antioxidant L-Theanine.

"In our research, consumers felt really comfortable about the idea of taking something they did every day -- drinking coffee -- and combining it with something else they did everyday, like taking vitamin C," Josh Kaplan, Green Mountain's brand manager for innovation, told brandchannel.

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