Green Mountain Coffee Roasters (GMCR) has provided investors, both long and short, with quite a ride over the past year or so. Emerging from an extended hyper-growth period, investors have been anxiously waiting to see what is next for the company. Will they still manage to produce growth at a more modest, sustainable level, or contract into irrelevance? Based on their positive quarterly/annual report in November 2012 and recent initiatives, it is clear that GMCR is responding to their circumstances, so what can investors expect? In this article, I attempt to gather information from a variety of sources to provide some insight into what we might see in the next year or two.

GMCR 1.0 and 2.0

Green Mountain Coffee Roasters started life as a premium coffee shop in Waterbury, VT in 1981. The coffee that they roasted for their cafe acquired a reputation and following, and the company branched

Over the past couple months, I have written a couple of articles detailing Green Mountain Coffee Roasters (GMCR) patents. The first one presents an in-depth discussion of GMCR's first line of defense - the patents protecting the company from K-Cup competition. This included an in-depth discussion of some key patents and ongoing lawsuits that GMCR has filed against knock-off coffee cartridge manufacturers. The next article provided information on GMCR's second line of defense - the K-Cup filter designs. There I discussed the evolution of the internal configuration of K-Cups, patents pending, and the challenges and compromises that K-Cup cloners will face. This article focuses on GMCR's third line of defense against competition - the leverage that comes with control of the Keurig brewing platform. While some of GMCR's K-Cup patents will expire later this year, several key brewer patents protect against competing brewers capable of consuming K-Cups until

Much has been made recently about Green Mountain Coffee Roasters (GMCR) patent protection ending in September 2012. I wrote an article recently with a deep dive into the GMCR patents and the ongoing lawsuits against current knock-off manufacturers. The main focus of recent attention is that US Patents 5,325,765 and (at least part of) 5,840,189 expire this year, and short-side analyst claims that the market will be flooded with low-cost K-Cup clones. In fact, every box of K-Cups on your shelf mentions these two patents, along with "other patents pending."

What I haven't seen discussed anywhere is that the cartridges in those two expiring patents, while groundbreaking, didn't work very well. In fact, in a later patent application, GMCR discussed those two original patents:

"...the configuration of the filter element encourages rapid liquid penetration to and through the lower end, resulting in less than

Introduction

Green Mountain Coffee Roasters (GMCR) has provided a lot of fascinating action over the past six months. One aspect of the company that bears have been emphasizing is that in September 2012, the patents protecting GMCR's K-Cup will expire, and the resulting competition will result in lower sales and margins. In his now-famous "GAAP-ucino" presentation, David Einhorn of Greenlight Capital, on slides titled "Competition Expected in September 2012" and "The Reality of GMCR's Patent Position," stated:

- Both patents (patent 5,325,765 and patent 5,840,189) are set to expire

- Any aspect of the K-cup that was revealed in either patent falls into the public domain

- Competitors will be able to produce K-Cups

GMCR, on the other hand, paints a very different picture of the patent situation. Here is what they had to say in their 2011 annual report:

In the United States, patents associated with