Green Mountain Is Patently Offensive

Green Mountain Coffee Roasters' (Nasdaq: GMCR  ) K-Cup patents are expiring in a few months, so the Keurig company is going on the offensive.

A new single-serve brewing platform -- Vue -- was unveiled by Green Mountain yesterday. When the Keurig Vue V700 brewer hits the market in the coming weeks, richer and more customized blasts of java will be the push of a button away.

Vue introduces adjustable water pressure, timing, and airflow settings to the process. Larger servings and hotter temperatures are also available. The new options may seem to make the new platform more confusing, but there's no shame in simply going with the default settings.

The very heart of Vue will be the proprietary single-serve portion packs that can crank out richly customized beverages including coffee, tea, and hot cocoa as well as iced, fruit-based, and frothy cafe beverages.

Yes, frothy. Green Mountain's new two-step Barista Prima Cafe beverages feature separate dairy frother packs to provide creamy froth on top of their premium brews.

Green Mountain obviously isn't going to turn its back on its original K-Cup brewer. There will be some serious money to be made even after the patents on the refills expire. The guidance that the company provided after its latest quarterly report isn't assuming much out of Vue's first year on the market, and investors may want to do the same.

Any success that Vue achieves will be incremental. Its original target market is high-end consumers with the $250 V700 model, though it can't be aiming too high if it already nabbed Bed Bath & Beyond (Nasdaq: BBBY  ) as its first Vue distributor.

Several of the K-Cup brands that Green Mountain has acquired will naturally be putting out Vue packs at the launch. J.M. Smucker's (NYSE: SJM  ) Folger's and Millstone brands and Caribou Coffee (Nasdaq: CBOU  ) will also be on board, expanding the growing business that the two companies have experienced since backing Keurig with the original K-Cup.

Starbucks (Nasdaq: SBUX  ) is noticeably absent. The java giant had signed a deal to be Keurig's lone "super-premium" K-Cup brand last year. It's surprising to see that it's not standing out on this high-end machine with high-end price points for the Vue packs.

Piper Jaffray is impressed, raising the firm's price target from $59 to $73 on the news. If the new brewer takes off -- cracking open a brand-new window of portion-pack patents -- Piper Jaffray won't be the last to be impressed, either.

Brew ha ha
Shares of Green Mountain have popped sevenfold since I originally recommended the java heavy to Rule Breakers subscribers three years ago. It's clearly been a big winner for the growth stock newsletter service, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report tells all. Check it out before it's gone.  

The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Bed Bath & Beyond, Green Mountain Coffee Roasters, and Starbucks. Motley Fool newsletter services have also recommended creating a lurking gator position in Green Mountain Coffee Roasters and writing covered calls in Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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12/19/2014 4:00 PM
BBBY $73.55 Down -0.03 -0.04%
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GMCR $137.17 Down -0.44 -0.32%
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SBUX $79.44 Down -0.59 -0.74%
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