Green Mountain Coffee Roasters Annual Report

Green Mountain Coffee Roasters, Inc. (GMCR)

Prepared For
Gary L. Payne, MBA
Sam Houston State University

Prepared By
Eric Robinson
Fall Semester 2013

Part I
History
The coffee and tea manufacturing industry has become a $70 billion annual global sales commodity (First Research, Industry Overview). Business continues to boom and coffee manufacturers are able to broaden their revenues by reaching new segments and geographic areas through creative marketing initiatives. According to First Research (8/12/2013), the US US coffee and tea manufacturing industry includes about 300 companies with an annual combined revenue of almost $12 billion. That equates to less than one third of the global annual sales.
With Starbucks corralling the majority of the upscale retail coffee consumers; Dunkin’ Donuts, the blue-collar, no-frills brand coffee drinker; Green Mountain Coffee Roasters (GMCR) went looking for a way to capture the self-serve specialty coffee consumer in North America and Canada. This customer tends to be a gourmet beverage drinker who doesn’t compromise on taste but likes quickness and convenience. The GMCR state of the art eCommerce portal allows customers to create the ultimate coffee experience in the home, in the office, and in food service environments. GMCR is so committed to the outstanding coffee experience that they purchase some of the highest quality Arabica beans available from the world’s coffee producing regions and match it with the appropriate process to optimize the coffee’s taste and aroma.
From a small café in Waitsfield, Vermont to a recognized leader in specialty coffee and brewing platforms, GMCR is now leading the way to the successful marketing of expanding their brand awareness and enabling environmentally and socially responsible business practices.
By partnering and promoting with Keurig Brewing Systems, GMCR realized a 46% net sales for fiscal year 2012 with 90% of net sales attributed to Keurig (GMCR 2012 Annual Report). The Keurig brand has connected with consumers to bring a sense of accessibility, high-quality, excellence, and uncomplicatedness to average living. The brewing platform provide a vehicle to support the GMCR coffee and beverage brands which allows awareness of the GMCR brands to continue to grow. New product innovation will also drive long-term growth- Keurig brewing platforms will target accessory beverage
categories.
GMCR will continue to broaden its partnership base to provide a broad beverage portfolio of more than 32 brands and more than 225 variety of cold and hot beverages.
The GMCR business mission is epitomized in its relationship with Keurig, “A brewer on every counter and a beverage for every occasion”(GMCR 2012 Annual Mission, Business Mission) . GMCR has entered into tactical affiliations aimed at the manufacturing, distributing and sale of many of their retail competitor such as Starbucks, Dunkin’ Donuts, The J.M. Smucker Company, and Newman’s Own Organics. As part of its marketing strategy, GMCR is partnering with the strongest beverage brands and creating brew systems that represent the geographic taste preferences of coffee drinkers across the United States and Canada. GMCR has expanded its beverage selections beyond coffee to include ciders, teas, cocoas, and fruit brews. Through these efforts GMCR continues to regenerate its growth cycle building sustained growth through continuous innovation and promotion for new
brands.
GMCR strategy is to provide widespread coverage of its brands and channels in a variety of settings and easy access to the product. GMCR operates from three business units: the Specialty Coffee business unit (“SCBU”), the Keurig business unit (“KBU”), and the Canadian business unit (“CBU”)(2102 Annual Report, pg 6). Each business unit uses different selling organizations and strategies.
Coffee and tea manufacturers, like GMCR, depend on a healthy economy and strong consumer spending to drive sales, as consumer spending drives demand for higher-priced specialty products. Similarly, in the commercial segment dependence on the economic health of businesses, like restaurants and hotels, drive out-of-home consumption. Economic downturns affect both segments, as consumers dine out less frequently and limit spending on pricier goods during tough times. The US restaurant industry, an important customer of roasted coffee products, is forecast to reach more than $660 billion in sales in 2013, according to the National Restaurant Association. The industry represents 4 percent of GDP and employs 10 percent of the workforce. Full service restaurant sales are projected to reach more than $200 billion in 2013, while quick service sales are expected to top $225 billion. If GMCR can target and garner a significant portion of this market it will continue the steady growth climb of the last few years.
GMCR wants to transform the way the world views business –especially the business of coffee by creating the ultimate coffee experience in every life it touches from tree to cup. GMCR will continue its quest to be a high growth, innovative, socially responsible company but the increase in competitive coffees, teas, beverages and brewing platforms put pressure on its operating margins and profitability.

References
McGinn, D. (2011, Aug. 7). The Buzz Machine. Boston.com. Retrieved Sept. 12, 2013 from http://www.boston.com/business/articles/2011/08/07/the_inside_story_of_keurigs_ris e_to_a_billion_dollar_coffee_empire/
Coffee & Tea Manufacturing. N.p.: First Research, 2013. Newton Gresham Library. Web. 23 Sept. 2013. http://mergent.firstresearch-learn.com/callprep.aspx?pid=239 URL: http://shsulibraryguides.org/alldatabases
Green Mountain Coffee Roasters, Inc. - Financial Information. N.p., 29 Sept. 2012. Web. 25 Sept. 2013. .