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  • Red Flags Drape Green Mountain Coffee Roasters [View article]
    This is a good discussion today and I only have one point to add regarding the Einhorn-inspired myth that Green Mtn would succomb to cheaper competition. That never struck me as an intelligent point of view and now it seems downright silly.

    Perhaps the biggest news to come out the past few days was the confirmation by OTR Global that TreeHouse's unlicensed single-serve cups (Grove Square) are literally breaking apart during the brewing process, causing coffee grounds to spew out and clog the brewer. I've also read complaints from consumers that the same is happening with Wal-Mart's Great Value cups: http://bit.ly/T9FPu6

    To confirm what's coming out about the cheap knock-off cups, you only have to conduct a brief examination. Set a Great Value cup next to an authentic K-Cup and dissect the two. The so-called value brand uses a thinner shield of foil on top. Cut that away for a moment and inspect the little conical filter holding the coffee grounds. Give that a pretty light tug and you can pull it right off the seam of glue around the cup's rim.

    Comparing the two, the genuine K-Cup has a much tougher build than the cheaper cup. It's built to withstand the blow of the puncture needles on top and bottom, whereas the value cup is not. The top needle makes a sharp clear hole through the K-Cup's durable aluminum top, but causes what looks like a shotgun-blast to the bargain cup. Then when the interior filter rips off its rim, and the brewer forces a shot of water through, the grounds come bubbling up and out of the cup, messing up your coffee with grounds and causing a clog in the top needle.

    One of the great myths about Green Mtn was that its products were somehow overpriced. That it was ripping customers off, and as soon as the less expensive brands emerged, people would go flocking to them, excited to be "saving" so much money. I'm not sure where that myth even came from but I think it arose from people who either don't drink coffee or have a kind of reverse snobbism toward the premium coffee drinker "snobs."

    We now have confirmation of what I've suspected for half a year. There's only two ways to make an unlicensed single-serve cup that can sell more cheaply than a K-Cup. Use cheaper materials and manufacturing processes or use a cheaper grade of coffee. In my experience testing Supervalu's Java Delight - a soft-bottom model - and now Wal-Mart's Great Value - either or both of these are true with any of the unlicensed brands.

    Can you imagine what's running through the minds of the designers, engineers, and line operators at TreeHouse upon learning that the cups they're making are literally breaking apart at the seams? The only chance they have to make a successful product is to redesign, re-engineer, and re-tool, using better quality and more expensive materials, and driving the cost of their product up towards the price that Green Mtn has set for its product.

    And that's just regarding the physical makeup of the cup. This is a strictly anecdotal and personal impression, but I've taste-tested a Java Delight French Roast next to a Green Mtn Barista Prima French Roast and, sorry, but the Java Delight tastes like dirty water.

    I never even understood what the Einhorn crowd envisioned as the market for the bargain cups. People don't buy K-Cups to save money or for the one-button convenience. They pay up for a premium quality coffee - always have, always will. Anyone who wants to save money (trust me, I've been there) will buy a can of very nice Yuban and run it through their drip brewer. The quality is quite "good enough" and - let's get real here - It doesn't even add a second of extra prep time compared to the single-serve system.

    Finally, the other day, I conducted what Seth will label an anecdotal or unscientific survey of the single-serve slots on the retail shelves at Wal-Mart. I've been watching the shelf-space and sales prices of the various cups for months but never stopped to add them up this way, and I was flabbergasted by the outcome. Including a prominently placed 4-sided bay for Green Mtn K-Cups, the slots for licensed K-Cups (predominantly Green Mtn brands) outnumbered the slots for value brands (Wal-Mart and Grove Square) by 235-5. I forgot to even count the slots for Green Mtn Vue cups, so I imagine the final count is closer to 270-5.

    So all of this pretty baseless short-stoked fear about Green Mtn's competition settles down to a very standard and basic premise: That value, bargain, and store-brands, whether for coffee or toilet paper, always find a few slots on the top or bottom shelves alongside, and subservient to, the higher-priced and superior quality market leader.

    As much as I've found myself alternately hating the shorts and gasping at their ignorance, I find myself taking a much broader view of the market these days and thanking them, really, for driving Green Mtn's price down so low that I got a genuine "steal."
    Nov 20, 2012. 11:59 AM | Likes Like |Link to Comment
  • Inquiring minds would like to know where the cash for a potential plan by Green Mountain Coffee Roasters (GMCR +4%) to go global will get pulled from as current cash sits rather low. With capex spending already getting trimmed to make way for buybacks, does the company have something else in mind? Investors may have to wait for GMCR's FQ4 report, now pushed back to November 27, to get their answers. [View news story]
    I've been speculating on various revenue streams and maybe someone can help out here. Lavazza will certainly make money on its espresso as it introduces it to a much broader market (for them) in North America. Since it'll be in a licensed kcup, GMCR will scoop off its fee. And of course Green Mtn will make money by selling the actual Keurig Rivo machine worldwide. I can't find it now but at one point I saw a Green Mtn espresso kcup on Lavazza's website. It's their finest label, Barista Prima espresso. Since this is a partnership I imagine Lavazza will be spreading its brand here, and Green Mtn will be spreading its brands (at least espresso) ROW. I think Lavazza will become very popular in North America - as it has that Italian cache and many are looking for an alternative to fast-food Starbucks. For Starbucks, I think Schultz will regret the day he made an enemy of Green Mtn, as he'll wish he could sell Starbucks espresso pods as part of the Rivo package. More opportunities for Green Mtn, perhaps, to introduce other kcups "over there?" I don't know, but I think once they launch they're off to a pretty good start.
    Oct 19, 2012. 11:20 AM | Likes Like |Link to Comment
  • Inquiring minds would like to know where the cash for a potential plan by Green Mountain Coffee Roasters (GMCR +4%) to go global will get pulled from as current cash sits rather low. With capex spending already getting trimmed to make way for buybacks, does the company have something else in mind? Investors may have to wait for GMCR's FQ4 report, now pushed back to November 27, to get their answers. [View news story]
    You just can't see the forest through the trees, I guess. It's Lavazza espresso, my friend, in a Keurig machine with real milk, it's a serious contender in that burgeonging espresso/latte market, and its scope is international from Australia to China and the United States.
    Oct 19, 2012. 10:50 AM | Likes Like |Link to Comment
  • Inquiring minds would like to know where the cash for a potential plan by Green Mountain Coffee Roasters (GMCR +4%) to go global will get pulled from as current cash sits rather low. With capex spending already getting trimmed to make way for buybacks, does the company have something else in mind? Investors may have to wait for GMCR's FQ4 report, now pushed back to November 27, to get their answers. [View news story]
    Most accounts of the projected "international expansion" leave the impression that Green Mtn must be starting from scratch here. By contrast, the espresso initiative with Lavazza has been under research and development for more than two years and is already entering production. Lavazza partners with other machine producers, most notably Senseo, and then helps market and distribute the combined coffemaker/Lavazza espresso worldwide. It'll be the same here with the Keurig brand. I noticed that Lavazza is advertising worldwide for "product demonstrators." I do not know if they intend to demonstrate the Rivo - but that will not surprise me.Take a moment and visit the following website. If you can ignore the "goofy" source for one second, just scroll down about a fourth of the page and you'll see how far Keurig's Rivo has come: http://bit.ly/UaH4gO
    Oct 19, 2012. 09:51 AM | Likes Like |Link to Comment
  • Inquiring minds would like to know where the cash for a potential plan by Green Mountain Coffee Roasters (GMCR +4%) to go global will get pulled from as current cash sits rather low. With capex spending already getting trimmed to make way for buybacks, does the company have something else in mind? Investors may have to wait for GMCR's FQ4 report, now pushed back to November 27, to get their answers. [View news story]
    On Aug 10, 2010, Green Mtn and Lavazza entered into a $250 million common stock purchase agreement to work toward "development, marketing and distribution" of new single-serve espresso machines and single-serve capsules." GMCR announced intention to use proceeds for financing its growth plans and enabling initiatives. Lavazza CEO Gaelano Mele stated at the time. "This investment is but the first step in a wider-ranging collaboration with GMCR in R&D, innovative technology and international expansion for both companies." (GMCR Aug 10 news release). As you know, this September Lavazza added 2.8 million shares, increasing its holdings by 36 percent, and now owns 6.8 percent of the company.
    Oct 19, 2012. 09:18 AM | Likes Like |Link to Comment
  • Stay Away From Green Mountain Because Of Competitive Threats And Unclear International Expansion Plan [View article]
    I think the Daily Telegraph (The Telegraph), British-based, circulation 576,000, spoke well toward the undercurrent of resentment in Britain and Europe toward Starbucks in its Oct 3 Food and Drink section review of the Verismo: "Starbucks is banking on us liking the taste of its dull-flavoured coffee so much that we will suffer dried milk and inflated prices for the privilege of not having to trek out to one of its almost 20,000 coffee shops worldwide. Thinking about it, I’d pay quite a lot not to have to go to one." I'll leave it to you, Qineqt, to assess contrasting opinions of Lavazza over there.
    Oct 18, 2012. 01:22 PM | 2 Likes Like |Link to Comment
  • Stay Away From Green Mountain Because Of Competitive Threats And Unclear International Expansion Plan [View article]
    I repeat: I am not you. Weird coincidental timing again!
    Oct 18, 2012. 01:00 PM | 2 Likes Like |Link to Comment
  • Stay Away From Green Mountain Because Of Competitive Threats And Unclear International Expansion Plan [View article]
    Bulls have known for about two years where Green Mtn is going with its international expansion, so it's not an "unknown" to them, and that's why they have confidence bidding it up. Your article neglects to even mention what's paramount in this discussion: the upcoming launch of Keurig's first entry into the international espresso market. In all the din over the Verismo, Keurig's Rivo hasn't received much notice. But I'm certain that a Keurig espresso maker with world-renowned Lavazza espresso and its distribution channels will make this an instant challenger to Nespresso. I don't see how Starbucks will stand a chance against a double-punch from Nespresso and Keurig. Lavazza has pull in Europe and the ROW whereas Starbucks is a fledgling at best and, well, rather frowned-upon, at worst.
    Oct 18, 2012. 12:57 PM | 5 Likes Like |Link to Comment
  • Green Mountain Coffee Roasters (GMCR +8.6%) rallies after an executive hiring suggests international growth is on the company's plate. Though it acknowledges that it's looking at opportunities outside of North America, Green Mountain has been cryptic over where the focus may be. [View news story]
    No, it's only speculation on my part, considering the big stake Lavazza has in GMCR and the fact that four styles of Lavazza espresso will be at the heart of the Rivo's "kcups." (See photo toward bottom of http://bit.ly/U57nFh.) Just seems natural to me that Rivo/Lavazza espresso will be packaged similarly to Kuerig/Kcup displays, Vue/Vcup displays, or Verismo/Starbucks displays. Hopefully Green Mtn can still launch before Christmas and the company can begin to provide such details.
    Oct 17, 2012. 07:59 PM | 1 Like Like |Link to Comment
  • Green Mountain Coffee Roasters (GMCR +8.6%) rallies after an executive hiring suggests international growth is on the company's plate. Though it acknowledges that it's looking at opportunities outside of North America, Green Mountain has been cryptic over where the focus may be. [View news story]
    I'm definitely not the same guy as markb above, yet we're obviously both long this company. It's so easy to connect these dots, folks, International, upcoming launch of the Rivo with Lavazza, a coffee giant in Europe in contrast to fledgling Starbucks. Real milk and Lavazza brand will make Rivo an instant contender with Nespresso and with Starbucks as the tiny home espresso market grows in the U.S. For a glimpse of the Rivo, scroll down toward bottom of this link: http://bit.ly/U57nFh
    Oct 17, 2012. 02:56 PM | Likes Like |Link to Comment
  • Single Cup drama: Starbucks (SBUX +0.7%) plans to begin selling its Verismo coffee and espresso machines tomorrow as it attempts to cut into Green Mountain Coffee Roasters' (GMCR +0.7%) significant headstart in the market. Although a variety of channel checks show the presence of Verismo as impacting GMCR sales, the real test will be to see if consumers pay the SBUX premium to make a switch. Another wildcard in the mix is Kraft Foods Group (KRFT -0.7%). Though it's derided by coffee purists on quality, it still boasts over $1B in package sales for the Maxwell House brand. [View news story]
    Naivada, the sole source you quote here for channel checks, says nothing in his tweet about "the presence of Verismo" as "impacting GMCR sales." Can Market Currents please provide additional sources that make that claim? You state that you're aware of a variety of them. And I'm wondering now if Naivada was perhaps the primary source of Monday's infamous NPD rumor and whether you or a contributor will follow up on the genuine NPD data. Otherwise, I found this Market Current straightforward and accurate. Thanks.
    Oct 16, 2012. 01:09 PM | Likes Like |Link to Comment
  • Green Mountain Coffee Roasters (GMCR +1.9%) plans to get into the vitamin game with new coffees, teas, and fruit drinks infused with vitamins. The new Wellness Brewed K-cup brand that debuts online today smacks of desperation to at least a few analysts (I, II) who are lighting up Twitter with sarcastic comments on GMCR management. [View news story]
    I'm a retired newspaperman of thirty years and a fulltime stock trader for the past five years. I once had respect for Seeking Alpha but after seeing this "Market Current" I now consider it little more than a pandering gossip rag. I think SA readers need an explanation from an editor there about who writes these blurbs and whether they are even reviewed by an editor before they're published. When reporting a breaking news story, does SA routinely scan Twitter to pick out a few comments that a writer can massage into a juicy item that serves his bias? Has SA really sunk so low as to be reporting Twitter chatter? For the record, that one sentence above is not only extravagantly slanted but also extravagantly innacurate. Of the "more than several analysts" I count potentially one analyst. Howard Penney may fit the definition of analyst (Consumer Goods for Hedgeye) but I fail to see how hedge fund manager and semi-retired broker Ron Reuven; TV commentater Herb Greenberg; convicted felon and former CPA Sam Antar; and some guys named Dominic and Marc Cohodes qualify for the title of analyst. And c'mon, remarks from six guys, four of whom seemingly spend most of their waking hours twittering negative comments about GMCR, does not exactly constitute "lighting up Twitter." Six guys sounds like a pretty pathetic response for a megasite like Twitter, but you should consult your Twitter Editor for a ruling on that one. I imagine SA has a Twitter Editor these days, as that's what it seems to spend most of its time doing these days. Seeking Alpha has become trashy and is now dead to me.
    Sep 6, 2012. 09:56 PM | 1 Like Like |Link to Comment
  • The Main Problem With Green Mountain Coffee Roasters [View article]
    I'm sure you're right, Paulo. Still, interesting to me that the speculation is gearing up, as in a short May 3 piece on The Street, noting "Starbucks CEO Howard Schultz... and private equity firms... are likely crunching the numbers as we speak." The Street notes further that with "possible real buyers on the sidelines," Green Mountain shares "may stabilize - and soon." I wouldn't be trading long on takeover speculation, yet GMCR will certainly be offering some money-making opps for shorter-term trades as it builds what I believe will be a floor with some nice upward swings like the one that tempted you the other day. Trading, for sure, and a bit tricky, as you have to catch the bottoms and sell the tops. Thanks for your very good article. and the great ensuing discussion.
    May 5, 2012. 01:15 PM | Likes Like |Link to Comment
  • The Main Problem With Green Mountain Coffee Roasters [View article]
    P.S. If SBUX does acquire GMCR, I hope they scrap the now-tarnished Green Mountain brand but keep the Tully's brand because Tully's makes an especially fine Italian Roast.
    May 5, 2012. 11:28 AM | Likes Like |Link to Comment
  • The Main Problem With Green Mountain Coffee Roasters [View article]
    I'm wondering, Paulo, doesn't the SEC face any deadline to take action on an inquiry - to either abandon it or take punitive action? Can an inquiry simply go on forever?

    And also, if Starbucks, Kraft, or private equity views GMCR as an attractive target, won't their priority be to make an offer sooner, with the price at this level, rather than later, after everything is cleared up, and the asking price has consequently risen 30 or 40 percent?

    I've tried hard to keep an open mind to the competing theories, Fraud vs. Mismanagement, and at this time I place more credence in the Mismanagement theory. Unlike those speculating about alleged Fraud, the Mismanagement proponents can produce actual evidence to make their case, such evidence being stored on record in GMCR's last conference call. Talk about a smoking gun!

    Seems to me that Starbucks, particularly, will be hot on the trail to snatch this company at this price and add this gem to its global coffee empire, knowing full well that a good management team with experience in the specialty coffee industry can set thier newly acquired department straight in fairly short order.
    May 5, 2012. 11:24 AM | Likes Like |Link to Comment
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