Keurig Green Mountain and Starbucks: 2 Companies on the Move

These companies understand that sitting still means death.

Jul 3, 2014 at 6:30PM

Beverage company Keurig Green Mountain (NASDAQ:GMCR) as well as restaurant chain Starbucks (NASDAQ:SBUX) recently demonstrated that they won't take complacency lying down. Let's check out their latest product and infrastructure moves.

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Motley Fool Flickr by Nathaniel Munson

Keurig Green Mountain on the move
Keurig Green Mountain wants a piece of the estimated $260 billion global home carbonation market.The governor of Georgia, Nathan Deal, announced that Keurig Green Mountain will open a manufacturing facility in Douglas County, GA making pods for the new Keurig Cold Platform where consumers can blend carbonated sodas at home. The system should come online in 2015.

If Keurig Green Mountain captured 10% of that market, it would translate into $26 billion in revenue and $2.9 billion net income based on its current net profit margin versus the $4 billion in revenue and $483.2 million it clocked in 2013. Just 1% would provide a nice $2.6 billion in incremental revenue.     

On the product innovation front, Keurig Green Mountain announced a partnership with privately held BJ's Wholesale Club for exclusive distribution of the Wellsley Farms Signature Blend K-Cup. Consumers can purchase an 84 count pack in the BJ's stores or online. To quote fellow Fool Brandy Betz, "licensing agreements keep the big names locked into Keurig Green Mountain's brewing systems -- and keep little things like K-Cup patent expiration from torpedoing revenue."

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Source: Motley Fool Flickr by Chris Mali

More Starbucks innovation
Starbucks stays innovative both in terms of products, employee relations, and public relations. It demonstrates a constant desire to keep the public conversation about the company positive. New products and positive public relations renews consumer interest and keeps them coming back and purchasing more products adding to revenue and cash flow. This represents one of the reasons Starbucks grew its revenue and free cash flow 52% and 86%, respectively, translating into a total return of roughly 464% versus the S&P 500 total return of 135% over the past five years.

As of June 23, customers in a few select markets can enjoy three Fizzio Handcrafted Sodas in golden ginger ale, lemon ale flavors, and spiced root beer. Customers can customize the amount of fizz in each beverage and even carbonate their favorite tea or refresher drink for a $0.50 fee. On the same day Starbucks also introduced a new Shaken Iced Blackberry Mojito Tea Lemonade as well as a new turkey pesto panini and a grilled cheese sandwich. 

On June 24, in response to a growth in demand of super-premium green juice, the company expanded its cold pressed Evolution Fresh juice portfolio. The new juices include blends of coconut water, cucumber, leafy greens, pineapple, apple, and mint. The company will also test a green juice based smoothie. 

Foolish takeaway
Investors should take comfort as Starbucks and Keurig Green Mountain ramp up their expansion and partnership initiatives. These two companies truly desire to innovate and move their companies forward. Starbucks and Keurig Green Mountain certainly deserve more of your research time.

Another stock worthy of your research time
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

 

William Bias owns shares of Starbucks. The Motley Fool recommends Keurig Green Mountain and Starbucks. The Motley Fool owns shares of 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.

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