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A nugget from Wal-Mart's pre-recorded conference call could have some bearing on the single...

A nugget from Wal-Mart's pre-recorded conference call could have some bearing on the single serve coffee market. The company says Sam’s private label version has been popular with its members ever since the expiration of the K-cup patent. Will Green Mountain Coffee (GMCR -2.3%), Caribou Coffee (CBOU -6%), and Treehouse Foods (THS +0.8%) feel a pinch if Wal-Mart unleashes its pricing power on the K-cup market or will coffee house quality win out? (WMT call transcript .pdf)
Comments (5)
  • Omer Altay
    , contributor
    Comments (478) | Send Message
    No chance.



    Read customer feedback for this "Popular" product. In the end, Walmart will license with GMCR.
    15 Nov 2012, 03:40 PM Reply Like
  • Yaron Ron Reuven
    , contributor
    Comments (465) | Send Message
    Biggest retailer in the world cares less about specific companies, but rather about what sells more. If generic brand is a hit than that's a big problem for GMCR
    15 Nov 2012, 04:01 PM Reply Like
  • Omer Altay
    , contributor
    Comments (478) | Send Message
    Have you even READ The reviews? The product doesn't work half the time. It's not about Quality. It creates a mess. Read the reviews.


    Walmart cares about their reputation. They're not going to continue selling a product, especially with THEIR brand on it, that customers keep complaining about / returning.
    15 Nov 2012, 05:26 PM Reply Like
  • markb
    , contributor
    Comments (484) | Send Message
    GMCR target customers want quality coffee and single serve convenience. Most are unlikely to even shop at WMT. A different target segment is emerging...customers who want value coffee and single serve convenience. WMT might come up with a K for them, but if they do it doesn't necessarily reduce GMCR growth trajectory...the pie gets bigger. The idea that GMCR loyalists are going to give up GMCR K's and run in droves to buy inferior (see Omer's link above) generics is a short seller myth.
    15 Nov 2012, 04:26 PM Reply Like
    , contributor
    Comments (212) | Send Message
    I read all reviews on Sam's private label: coffee is good but the manufacture of K-cup is bad. There seems no problem with some Keurig models but not others. As some reviewers pointed out, it could be problem with the plastic used to make K-cup, the inside filter too close to the bottom or the unsecured filter. I think Sam can try to improve the product down the road but if the K-cup manufacture is outsourced, it could take long time. As Green Mountain has been making K-cup for long time, it should have advantage to make lower cost k-cup. The cheap private label is not because of less manufacture cost but using cheap coffee bean and less coffee. Green Mountain has two ways to go: (1) also selling K-cup with cheap coffee bean at low price to compete with private label but lower the profit margin; (2) leave the low price k-cup to private label and keep higher margin as K-cup pie is growing. I think Green Mountain is doing both but to different degree. I have spend some time with all single cup coffee makers, Keurig K-cup, Vie cup, Massimo, Verismo or CBTL. Keurig makers actually do not look cue but bulky. Other makers are look slim and fashion. But Keurig have bigger water tank. Tassimo has better brewing system than K-cup. The Vue has the similar brewing system with Tassimo. You have to give Green Mountain credit to make Keurig popular. In short, private label should not kill Green Mountain K-cup and actually an endorsement to Keurig. 40% short interest is bet on bankruptcy of Green Mountain that I don't think it going to happen. In worst scenario, Green Mountain is found guilty of account irregularity and stock is sold, I will be the buyer because when all skeletons are out of closet all the short will cover. On the opposite, any good news from Green Mountain will cause short squeeze. The typical case is the short squeeze in earlier September. There is no free lunch for long or short, take a bet.
    15 Nov 2012, 11:27 PM Reply Like
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