Canaccord Genuity Morning Coffee on Green Mountain (GMCR): What Happened to the Green Men?
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Canaccord Genuity Morning Coffee on Green Mountain (Nasdaq: GMCR): What happened to the Green Men?
Starbucks (Nasdaq: SBUX) reported its fiscal Q1/2012 earnings on Thursday and the company credited its successful roll-out of Green Mountain Coffee Roasters’ K-cups as a major driver of its 72% growth in the consumer product group (CPG) and reported its K-cup success is running ahead of plan. Starbucks shipped over 100 million K-cup in only two months since their introduction on November 1, and noted that the shipments were not representative of simple pipeline fill. Also, Starbucks noted that Green Mountain has met expectations in terms of providing initial capacity, but that supply constraints remain. During calendar Q1, Starbucks branded K-cups will be rolled out into the Canadian CPG channel and the newly introduced blonde blend will be available in the K-cup format by the middle of the quarter. Green Mountain shares sold off on Thursday after reports that Wal-Mart (NYSE: WMT) would introduce a lower-end single-serve beverage system from Esio at some point this spring. The current Esio beverage system offers both hot and cold beverages by mixing concentrates with water. The product has broad applications well beyond just coffee, but Canaccord Genuity Consumer Products Analyst Scott Van Winkle don’t see it as competition for the core coffee consumer and thinks it shouldn’t be considered a risk for Keurig’s prominence. His best comparison for Esio as a coffee brewer is the flavia system, which also uses liquid coffee concentrates and has been around for decades, yet never crossed over into home use. The new product has no impact on his bullish investment thesis or perception of competitive risks.
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Starbucks (Nasdaq: SBUX) reported its fiscal Q1/2012 earnings on Thursday and the company credited its successful roll-out of Green Mountain Coffee Roasters’ K-cups as a major driver of its 72% growth in the consumer product group (CPG) and reported its K-cup success is running ahead of plan. Starbucks shipped over 100 million K-cup in only two months since their introduction on November 1, and noted that the shipments were not representative of simple pipeline fill. Also, Starbucks noted that Green Mountain has met expectations in terms of providing initial capacity, but that supply constraints remain. During calendar Q1, Starbucks branded K-cups will be rolled out into the Canadian CPG channel and the newly introduced blonde blend will be available in the K-cup format by the middle of the quarter. Green Mountain shares sold off on Thursday after reports that Wal-Mart (NYSE: WMT) would introduce a lower-end single-serve beverage system from Esio at some point this spring. The current Esio beverage system offers both hot and cold beverages by mixing concentrates with water. The product has broad applications well beyond just coffee, but Canaccord Genuity Consumer Products Analyst Scott Van Winkle don’t see it as competition for the core coffee consumer and thinks it shouldn’t be considered a risk for Keurig’s prominence. His best comparison for Esio as a coffee brewer is the flavia system, which also uses liquid coffee concentrates and has been around for decades, yet never crossed over into home use. The new product has no impact on his bullish investment thesis or perception of competitive risks.
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