Will Keurig Green Mountain’s Brewer Boost Growth in 2015
Specialty retailer Keurig Green Mountain Inc. ‘s K-Cups and the Vue packs (portion packs used for brewing single serve coffee in Keurig brewers) form an important part of the company’s sales. Keurig Green Mountain derived 84% of its sales from K-Cups and Vue packs in the recently concluded fiscal 2014 earnings results
In order to maintain its dominance in the single-serve coffee category, Keurig Green Mountain has signed several strategic distribution agreements with well-known coffee brands to distribute their coffee in its portion packs major coffee companies like Dunkin’ Brands Group Inc. provide their offerings into Green Mountain’s portion pack systems.
These deals have enabled Keurig Green Mountain to align with major beverage brands and offer products as per consumer choices and taste profiles under the Keurig Single-Cup Brewing system.
Last month, Keurig Green Mountain entered into multi-year agreement with Community Coffee Company and also took over Laughing Man Coffee and Tea brand, under which both Community Coffee and Laughing Man brand will distribute its coffee in K-Cup portion packs.
The company also expanded its partnership with Caribou coffee to boost its presence in the single-serve category.
Keurig Green Mountain’s launch of the new Keurig 2.0 brewer in September also gave a boost to the company’s top line. The new brewing machine is equipped with interactive readability technology that will work only with licensed pods. This gave a monopoly to Keurig coffee pods over others.
Apart from the hot beverage sector, the Zacks Rank #2 (Buy) stock is geared to expand its presence in the carbonation market and ready-to-drink tea sector. In December, Keurig Green Mountain agreed to acquire MDS Global Holding plc (Bevyz) (develops single – portion multi-drink system that dispenses hot and cold beverages) in an attempt to boost its single portion pack portfolio.
Keurig Green Mountain also expanded its partnership with The Coca-Cola Company in September to offer some beverages from the latter’s still brands (non-carbonated) portfolio under the Keurig hot brewing system, in the U.S. It is scheduled to launch the Keurig Cold Brewing machine in 2015 which will prepare carbonated cold beverages
We believe the initiatives and efforts to maintain its dominance in the single-serve brewing market is impressive. Further, these partnerships are expected to boost Keurig Green Mountain’s sales in 2015.
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