What The Green Mountain Coffee Investor Should Know [View article]
Don't get me wrong, as I said in my initial comment, your article is interesting. You just tried to stretch your data too far in terms of drawing conclusions.
What The Green Mountain Coffee Investor Should Know [View article]
So you think that selling Keurig brewers in thousands of new Starbucks outlets would have no effect on BBBY's share of overall brewer sales? In terms of year over year comparisons, for the record, Keurig brewers were sold at exactly zero Starbucks outlets a year ago.
What The Green Mountain Coffee Investor Should Know [View article]
Interesting article, but not particularly useful. With more outlets selling Keurig brewers all the time, the expected market share for BBBY (and all other single vendors) would be expected to drop. No conclusions on overall brewer sales can be drawn from a discussion of a single vendor.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
My estimate is based on the fact that short-range USB RFID readers are available to retail consumers for $40. GMCR would not need the case or USB components, and would be buying in quantities of a few million at a time. The much simpler system, and quantity purchases should reduce costs by well over half.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
You say this isn't Apple, but Apple is actually a remarkably good comparison. Compare an iPad with a Keurig brewer. Both are complex devices, protected by patents, sold with little profit, and serve primarily as a platform to sell other products. For Apple, they sell programs through their App Store, and take a big cut of each sale. For GMCR, they make money on each K-Cup sold. Neither company makes a lot on each sale, but they both make up for it with enormous volume.
And like GMCR, Apple has initiated lawsuits (primarily against Samsung) in an attempt to minimize encroachment that would result in lower sales and margins.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Well according to the Customer Service FAQ at http://www.keurig.com, "Each K-Cup® pack has a Best-Used-by-Date imprinted on the side. The Best-Used-by-Date is a guideline for optimal freshness recommended by the Roaster, it’s not an expiration date. K-Cup® packs are nitrogen-flushed, sealed for freshness and impermeable to oxygen, moisture and light."
The cartridges from JBR (currently being sued by GMCR), on the other hand, are not sealed at all, so once you open a new box, all the cartridges are immediately exposed to staleness-inducing oxygen. I could definitely understand freshness concerns with their products.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Pengo, you make very good points. GMCR had is easy for the past 5 years - all they had to do was build capacity as fast as earnings (and the bank) would let them. Now we get to see what GMCR management is truly made of, as they deal with potential competition and moderating growth.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Your comment is not supported by historical evidence - growth continued at a remarkable pace even before the low-cost vendors (being sued by GMCR) appeared on the scene. And lower-cost systems have been available in the US for many years. None of them have been able to establish more than a niche foothold, and there is no evidence that any of the recently announced vaporware systems will fare any better.
The reason lower-priced competition appeared is that K-Cups became ubiquitous, and others wanted a piece of the pie. And they wanted it bad enough to gamble on the patent infringement lawsuits that GMCR filed against them. This is an important point that you are missing - the appearance of the competitors was driven by the desire of unlicensed companies to get a piece of the action, not by any outrage from consumers over the high price of K-Cups.
Your comment that the market has peaked in terms of GMCR's pricing power is only true if the K-Cup market is open to lower-cost competitors. Which is why GMCR is using the courts, and other approaches such as the ones suggested in this article, to ensure their pricing power stays intact.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
GMCR has raised K-Cup prices continually throughout their rapid growth, so they have proven that they have very strong pricing power. The only thing that threatens their model is competition from expiring patents. If they find a way to ensure continued control over the K-Cup empire, they know that they can pass another couple cents of cost on to the consumer.
How much will it cost to implement? Well, they have already paid for the research on how to integrate RFID technology with their brewers. They don't manufacture the brewers themselves, so whatever manufacturing company builds the brewers will have to absorb the capital expense of updating their production lines. GMCR will have to pay extra for each brewer, and they will pass that on to the consumer. An extra 5-10% cost for a brewer that is purchased every few years is hardly going to drive their established base away, or kill their overwhelming market share.
Hi John, Last I heard the Sturm trial is set for this October, while the Rogers trial is quite a bit later (next year sometime, I think). Not sure why they didn't get injunctions, that really isn't my area of experience. I am pretty sure that both Sturm and Rogers filed for dismissal though, which wasn't granted either.
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
You are correct that the Nespresso patents should have ended. However, see the link that I included in the article above, that shows the competition being shut down last month by the patent court, based on the patented interface between the capsules and the brewers. Again, this is encouraging to GMCR, and their recent lawsuits don't mention the 765 and 189 patents. They focus on the interface between the Keurig brewers and the knock-off cartridges.
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
Colin, thanks for your insights. The one thing that I think we can all agree on, based on the article and subsequent discussion, is that this is an extremely complex subject, and none of us can really know for sure how it will all play out. But the uncertainty will likely have a dampening effect on potential competition too - after all, who wants to commit capital to potentially worthless manufacturing lines, and plan for a costly legal battle in the current economy. The cost/benefit analysis may drive the last remaining coffee competition to take the easy road followed by Starbucks, Dunkin, Folgers, 8 O'Clock, etc - let GMCR do the heavy lifting and just collect royalties on every K-Cup sold.
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
Yes, that Canadian patent you mentioned has not been approved in the US. It is US application 20050051478. This was initially denied in the US, but GMCR actually sued the USPTO over the decision - see http://bit.ly/JtQRJ8 . I limited my discussion to patents that have been granted, not on the patents pending.
Regarding the odds of success for the ongoing lawsuits, I have no idea. However, I think at least one of the companies filed to have the suit dismissed, and was denied.
Your comment on Keurig brewer knock-offs in the fall is interesting, do you mean brewers that will process K-Cups, or just a similar concept? Based on the many brewer patents, it seems a K-Cup brewer would be pretty challenging.
What The Green Mountain Coffee Investor Should Know [View article]
What The Green Mountain Coffee Investor Should Know [View article]
What The Green Mountain Coffee Investor Should Know [View article]
What The Green Mountain Coffee Investor Should Know [View article]
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
And like GMCR, Apple has initiated lawsuits (primarily against Samsung) in an attempt to minimize encroachment that would result in lower sales and margins.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
The cartridges from JBR (currently being sued by GMCR), on the other hand, are not sealed at all, so once you open a new box, all the cartridges are immediately exposed to staleness-inducing oxygen. I could definitely understand freshness concerns with their products.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
The reason lower-priced competition appeared is that K-Cups became ubiquitous, and others wanted a piece of the pie. And they wanted it bad enough to gamble on the patent infringement lawsuits that GMCR filed against them. This is an important point that you are missing - the appearance of the competitors was driven by the desire of unlicensed companies to get a piece of the action, not by any outrage from consumers over the high price of K-Cups.
Your comment that the market has peaked in terms of GMCR's pricing power is only true if the K-Cup market is open to lower-cost competitors. Which is why GMCR is using the courts, and other approaches such as the ones suggested in this article, to ensure their pricing power stays intact.
Keurig Brewers: Another Line Of Defense For Green Mountain Coffee [View article]
How much will it cost to implement? Well, they have already paid for the research on how to integrate RFID technology with their brewers. They don't manufacture the brewers themselves, so whatever manufacturing company builds the brewers will have to absorb the capital expense of updating their production lines. GMCR will have to pay extra for each brewer, and they will pass that on to the consumer. An extra 5-10% cost for a brewer that is purchased every few years is hardly going to drive their established base away, or kill their overwhelming market share.
The K-Cup Cloner's Dilemma [View article]
-Marty
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
Green Mountain Coffee Patents: Does The World End In 2012? [View article]
Regarding the odds of success for the ongoing lawsuits, I have no idea. However, I think at least one of the companies filed to have the suit dismissed, and was denied.
Your comment on Keurig brewer knock-offs in the fall is interesting, do you mean brewers that will process K-Cups, or just a similar concept? Based on the many brewer patents, it seems a K-Cup brewer would be pretty challenging.