Keurig Green Mountain And Its Operations

Green Mountain Coffee Roaster’s Keurig Single Brew system is dominating the U.S. market with an overwhelming market share. Analysts expect sales of single-cup brewing systems to continue to grow in the U.S. and competitors are eyeing a piece of the pie. An analysis of Keurig’s current position, based on Michael E. Porters 5-Forces, highlights a number of key areas of opportunity and risk for the company. Handled correctly, the Keurig product line should continue its growth, however, a number of significant pitfalls threaten its dominance.

In the open market share repurchase, the firm may or may not declare the repurchase. Depending on the market condition and the firm’s position in the industry, the firm can decide when and how many

The repurchase program increases the shareholder’s value. This is because of a rise in the price of the shares of the original shareholders.

Although the company is known for their coffee, they also drive a great portion of their revenue from baked good sales, which differs greatly from the Keurig Green Mountain strategy. Dunkin does compete against Dunkin intensely in the New England market, as both companies were founded and based in the area.

Since firms incur the re-purchase option by offering $20 cash for each stock bought back, the number of outstanding shares will be reduced. The Earnings per share will increase leading to an increased stock price.

Keurig should launch the Keurig-Cup in the at-home market and continue to use the K-Cup in the commercial market. The reasons of separating these two series are listed as follows:

The Coors Brewing Company was founded back in 1873 by two German immigrants Adolph Coors and Jacob Schueler. The two combined invested $20,000, $18,000 of which came from Schueler and the other $2,000 from Coors. The location of the brewery was in the mining town of Golden, Colorado. This location was picked because Mr. Coors believed the key ingredient in beer was the water source. The river that flowed through this mining town was perfect for his beer. The two investors worked together for seven years until Coors bought out Schueler and became the sole owner of the brewery in 1880. When prohibition finally hit Colorado in the year 1916, Mr. Coors was forced to find other means of making money. The brewery was converted to produce malted milk which he would then sell to candy companies. Four years after Adolph Coors passing, in 1929, prohibition is ended and his son, Adolph Coors Jr., takes over the family business. The distribution range of the company quickly expands and by 1948, it stretches across 11 states. It would remain this way for almost 30 years before they start to expand to try and reach a nationwide audience. In 2005, now in its fourth generation of Coors family management, the Coors Brewing Company votes to merge with Molson Brewing Company in Canada to form the Molson Coors Brewing Company. Together they are the world’s seventh largest brewer. Two years later

The Keurig coffee brewer is the leader in the retail market for single serves coffee brewers but it can do better. Keurig has been slowly losing some of its share of the retail market in recent years. In 2011 Keurig controlled 54 percent of the market which is down from its 2010 number of 60 percent and 2009 number of 63 percent (Geller). Keurig needs to take its product and it has to offer and enter into new markets and segments. It mainly needs to focus on the younger and lower income level of its

They have focused on building brand recognition and profitability by growing the business gaining assets to grow the company and products for greater customer satisfaction (About GMCR, 2004-2009). GMCR’s strategy to incorporate current large brands, such as Tully’s, Diedrich, and Keurig has helped to expand their customer base and satisfaction as well as the markets for their products (Phillips, 2011). Their focus on increasing their market shares in other companies will facilitate their expansion into new geographical markets and promote the brand. GMCR’s partnership with Keurig creates a larger consumer choice and the addition of agreements to create portion packs for the Keurig with companies such as Starbucks, Dunkin Donuts, and Newman’s Own helps set them apart from the competition (Invest in the Markets, 2011).

Company G is one of the top three small appliance and electronics companies in North America. Company G has decided to venture into the beverage category with state of the art coffee brewers to reach its profit potential and achieve customer demand. The new Doppio (pronounced dope-yo) Caffe Brewing System will shake up the Company because of its unique design and the high quality of the materials built right here in the USA. We believe the Doppio Caffe will be superior to any brewing system in the marketplace.

When looking at the 2004 DuPont analysis, you see that not only has profit margin increased every year, but it is more than 2% better than the industry average. That being said, Krispy Kreme does not utilize its assets as efficiently as its competitors. This potentially troubling because of the fact that they have gone through aggressive growth in stores recently. Is this an indication that these stores are not generating the sales necessary to justify the investment, or at least as well as its competitors might be able to? Finally the equity multiplier comes in below the industry average. To us this means that Krispy Kreme does not utilize its leverage as effectively as the competition. Perhaps it would be to Krispy Kreme’s benefit to increase leverage and invest in order to increase growth and earnings in a similar manner to its competition. Overall, we believe that Krispy Kreme is moderately

The system allows consumers to buy a variety of coffee and make a cup of coffee that has the quality like the one you would buy in a gourmet coffee house for upwards of $3 to $5. Based on the surveys and focus groups that had been conducted people were looking for convenience, minimal clean-up, and great taste. Keurig made its decision to promote the system based on those factors and with units succeeding in local businesses now was the time to strike, while the “iron is hot”, a large percentage of survey takers said they would gladly buy the units that were proposed based on the information they were given.

Keurig changed its owner structure in 2002. They made agreements with two of its roasters partners that are Van Houtte and GMCR, both acquired 70% stake in the company. Keurig’s single portion system is dependent entirely on the three key elements. a coffee brewer that perfectly controlled the amount, temperature and pressure of water to provide a consistency superior tasting cup of coffee. Crucial differentiation for

Firstly, it has shown significant growth year-on-year reflected in the 9% growth in EBITDA. It is a large, international company that is continuingly seeking to expand its operations, both in Europe and in the Americas. . It has acquired several acquisitions and has a continuing strong performance in South America. Its recent achievement of a corporate credit profile demonstrates its ability to pay its debt, reflecting a lower risk to investors. The large dividend that is paid to shareholders would also be evidence of a good investment, and the increase in dividend payout ratio demonstrates SKG’s strong dividend policy. Investors would be interested in SKG’s P/E ratio which calculates the company’s value on the stock market relative to its earnings. SKG’s P/E ratio increased from 6.47 in 2012 to 13.8 in 2013. The fact that the P/E ratio more than doubled in a year would show investors that the business is performing extremely well. Lastly, SKG refinanced its €1.375 billion Senior Credit Facility at significantly reduced rates, which is extremely important for investors as a less leveraged company is less likely to come under pressure from a

One of the biggest barriers from GMCR’s standpoint is that they realize they can possible build up sales and marketing for the Keurig system once they start producing and endorsing the product. They are capable of doing so because of the position that GMCR is in as an emerging