Green Mountain Coffee's (GMCR) Partners Are Stealing from the K-Cup Trough
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Price: $91.67 --0%
Rating Summary:
5 Buy, 15 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 15 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Green Mountain Coffee Roasters (Nasdaq: GMCR) is a stock that has defied gravity due to the strength of its Keurig single-cup coffee brewing systems and unique razor-razor blade model that has users of the system buying new K-Cups week after week. However, one analyst thinks the popularity of its partners' K-Cups could be the stocks downfall.
In a note to clients today, Stifel Nicolaus analyst Mark S. Astrachan warned investors that FDM scanner data and recent results from J. M. Smucker (NYSE: SJM) suggests Green Mountain's wholly-owned brands are losing share of system-wide K-Cups to partner brands.
The analyst noted that this happened following the September 2010 launch of Folgers and Millstone K-Cups. The problem could accelerate with the rollout of Dunkin' Donuts (Nasdaq: DNKN) and Starbucks (Nasdaq: SBUX) K-Cups in Summer 2011 and Fall 2011.
Astrachan notes that the share losses are important as they believe Green Mountain's K-Cup operating profit is lower for partner brands. Hence the more partner brand K-Cups that are bought, the lower margins go.
The firm estimates that Green Mountain's K-Cup market share, by volume, was 84% in June 2011, down from 100% in September 2010. Smucker's share increased from 0% to 16% during the same time period.
Additionally, the analyst believeS the deceleration in Keurig brewer and K-Cup shipments in F1H11 suggest the Smucker's rollout and the pending rollout of Starbucks and Dunkin' have not yet accelerated system adoption.
The firm is maintaining their Sell rating on Green Mountain shares.
For more ratings news on Green Mountain Coffee Roasters click here and for the rating history of Green Mountain Coffee Roasters click here.
Shares of Green Mountain Coffee Roasters are down 4.3 percent today.
In a note to clients today, Stifel Nicolaus analyst Mark S. Astrachan warned investors that FDM scanner data and recent results from J. M. Smucker (NYSE: SJM) suggests Green Mountain's wholly-owned brands are losing share of system-wide K-Cups to partner brands.
The analyst noted that this happened following the September 2010 launch of Folgers and Millstone K-Cups. The problem could accelerate with the rollout of Dunkin' Donuts (Nasdaq: DNKN) and Starbucks (Nasdaq: SBUX) K-Cups in Summer 2011 and Fall 2011.
Astrachan notes that the share losses are important as they believe Green Mountain's K-Cup operating profit is lower for partner brands. Hence the more partner brand K-Cups that are bought, the lower margins go.
The firm estimates that Green Mountain's K-Cup market share, by volume, was 84% in June 2011, down from 100% in September 2010. Smucker's share increased from 0% to 16% during the same time period.
Additionally, the analyst believeS the deceleration in Keurig brewer and K-Cup shipments in F1H11 suggest the Smucker's rollout and the pending rollout of Starbucks and Dunkin' have not yet accelerated system adoption.
The firm is maintaining their Sell rating on Green Mountain shares.
For more ratings news on Green Mountain Coffee Roasters click here and for the rating history of Green Mountain Coffee Roasters click here.
Shares of Green Mountain Coffee Roasters are down 4.3 percent today.
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