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Bill Burtchaell
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Nearly 35 years in Real Estate development, marketing, sales, property management in Georgia, SC, Florida. Day trader, interest in energy, politics. Believer in the immeasurable strengths of free people seeking market driven solutions for personal gain and improvement.
  • C-Change as in coffee brewing GMCR 8 comments
    Nov 4, 2011 11:39 AM

    I'm sitting here enjoying a fresh brewed cup of Double Black Diamond Bold from Green Mountain Coffee Roasters.  My wife just finished a cup of Caribou decaf. No we didn't brew up two pots of coffee, or pour from a pot of earlier brewed stale coffee, we each had our own individual favorite from our supply of K-cups and we fresh brewed each cup in less than a minute with our Kuerig single cup brewing machine. There's no mess or clean up required. 

     Yes we paid almost 60 cents for each cup, expensive? We don't think so, compared to what?, going out to Starbucks or Caribou and buying our choices? or tossing half a pot,  No, there is a real value to be enjoyed by sitting here casually enjoying a fine cup of coffee, while I remember the old days.  Yes I can still remember a time when we would get up and make a pot of coffee and let it sit till the timer turned it off, 2 hours, then maybe even heat up a stale cold cup in the microwave,  seem so long ago!  Why it's been almost 2 years ago now!
    There has been a major change in coffee making at home and in the office, and it's still happening right before our eyes.

    Let me make it clear I do not work for Green Mountain,  I just enjoy their fine coffee, so I bought their stock, it's been up and down as most stocks do, and there has been some manipulation by different interests who gained from that movement.  It is apparent to me that regardless of all the positive and negative commentary that goes on in the trader universe,  it has become quiite clear that someone at Green Mountain Coffee Roasters perceived a seismic upheaval in coffee preparation.   That vision has brought a clean, logical, practical, and high quality idea from perception, into tens of millions of kitchens and office break rooms across the planet.  How can this happen is such a short time?  The simple answer is that it just makes good sense, it makes good sense in every way you look at it. 

    I will state here, that as a market with only 8% penetration, the single cup coffee brewing business will continue to climb from here.  The days of stale or discarded pots of bitter coffee are over. Green Mountain will be a fine stock to own regardless of all the representations to the contrary.  This will be a long ride, and it has just begun.  Get a Keurig, make yourself a cup of Starbucks, or 250 other choices, buy GMCR and relax and enjoy.
    Remember the old office rule," whoever takes the last cup, makes a new pot".  Who makes it now? No one!  What's your pleasure?
     

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Comments (8)
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  • amserv
    , contributor
    Comments (13) | Send Message
     
    I wouldn't necessarily conflate "Single Cup" with GMCR. Single cup is an excellent idea. Nespresso likes it as does most of Europe. But since K-cup owns most of the US kitchen counter space, after Sept. (when their patents expire) you can't even say that K-cup = GMCR. SBUX pays GMCR a licensing fee; what's to prevent them from figuring out that licensing fee is unnecessary and using their own distribution to sell those little white plastic dixie cups of pre-packaged coffee?

     

    And would everyone be all excited if SBUX announced that you could now get GMCR coffee at their SBUX drive-thru's? That's analogous to GMCR allowing SBUX brand coffee to compete in their 'outlet' i.e. the Keurig brewer. My common sense meter is beeping.
    8 Nov 2011, 12:53 AM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Check your meter, you are suffering a malfunction!
    8 Nov 2011, 08:37 AM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Why would Sbux build a factory when all they need do is place an order? I'm sure that these little details and huge infrastructure outlays have been very carefully considered. The spread sheet probably sees a long, uncertain return on that size expense, and don't minimize the time value, and interest expense involved. And of course the market is here and now! No time to lose if you want to play here!

     

    START BREWING with GMCR, the logical, economic, market share answer to your hypothetical
    8 Nov 2011, 10:25 AM Reply Like
  • amserv
    , contributor
    Comments (13) | Send Message
     
    Does the single-serve k-cup packet involve an order of magnitude greater manufacturing expertise and machinery than, say, single serve butter?
    8 Nov 2011, 06:48 PM Reply Like
  • amserv
    , contributor
    Comments (13) | Send Message
     
    As far as playing here and now, SBUX is doing that.
    But they have 11 months to figure out how they can avoid paying 6 cents per container in royalties (manufacturing costs are extra).
    They said they expect to ship 50 million just this month. That would be $3 million they're paying just for one month!
    How long do you think SBUX stockholders will allow that to continue? Or will they start clamoring for SBUX to find a factory already producing single-serve jam or butter or whatever and even if the manufacturing cost is the same, SBUX would save the royalty fee.
    And please don't suggest that there are a lot of smart people studying spreadsheets so I should just let my betters analyze this.
    8 Nov 2011, 06:49 PM Reply Like
  • Bill Burtchaell
    , contributor
    Comments (413) | Send Message
     
    Author’s reply » Am, hope you are not saying that producing a stick of butter or a jar of jam is the same as producing a vacuum sealed K-cup for a brewer.
    I don't know what your back ground is, and maybe you know more than I, but I'm being told that complete retooling and engineering is required to change the products on the line, as well as the speed, packaging, distribution and certification permits of a different purpose line is required, it's not just run this instead of butter.
    And the butter maker just stops with the butter, or jam, what about his products. It's still much cheaper and faster to pay the royalty and buy the k-cups from Green Mountain.
    9 Nov 2011, 02:18 PM Reply Like
  • amserv
    , contributor
    Comments (13) | Send Message
     
    " It's still much cheaper and faster to pay the royalty and buy the k-cups from Green Mountain."

     

    At the price GMCR opens tomorrow, it will be cheaper for SBUX to buy the whole company...
    10 Nov 2011, 01:25 AM Reply Like
  • amserv
    , contributor
    Comments (13) | Send Message
     
    On the conference call, the CEO mentioned that opening a production line for K-Cup 'Classic' is about $5 or $6 million. SBUX spends that on donuts for the staff.

     

    And I'm not saying a stick of butter nor am I saying a jar of jam. I'm saying a vacuum-sealed single serving of butter or a vacuum-sealed single serving of jam. The kind you get for free at every diner.
    10 Nov 2011, 01:25 AM Reply Like
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