Will Green Mountain Expand Overseas?
Shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) and Coffee Holding Co. (NASDAQ:JVA) are up on October 17. News that the Vermont-based coffee roaster has named Gerard Geoffrion as head of international business development has pushed the stock as much as 8 percent higher in early afternoon trading. Coffee Holding Co. is up about 4.5 percent at the same time.
“While we have no specific plans to discuss today, we’ve noted previously that we are exploring opportunities for our products in geographies outside of North America,” said Green Mountain spokeswoman Suzanne DuLong, according to Reuters. Those geographies could include China. Consumers in the country only drink three cups of coffee per capita per year, but sales of coffee pods increased 50 percent last year. Consumers in France drink about 604 cups of coffee per capita per year, leading many to see growth potential in the Chinese market if even a fraction of the appeal translates.
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Speculation has grown around Green Mountain recently, fueled by the launch of Starbucks’ (NASDAQ:SBUX) Verismo machine. Ever since the patents on single-brew coffee-pod technology related to the company’s successful Keurig machines expired, the idea of Starbucks and other competitors pushing into the market has caused some investors to shy away. But with more than three-fourths of the market for single-cup brewers, Green Mountain isn’t going to evaporate. The two companies still maintain a partnership where Starbucks — with a 15 percent share in the K-cup market — provides coffee pods for use in Keurig machines.
Green Mountain has also been fending off Dunkin Donuts (NASDAQ:DNKN) and McDonald’s (NYSE:MCD). Dunkin Donuts offers its own coffee pods and, together with McDonald’s, lures would-be at-home Keurig users away from K-Cups and into line at retail locations.
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