Mr. Coffee Climbs On the Green Mountain Train

By Rick Aristotle Munarriz
June 16, 2009 | Comments (3)

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As if Green Mountain Coffee Roasters (Nasdaq: GMCR) weren't selling its Keurig single-cup brewers quickly enough, it now has Mr. Coffee on its side, too.

Jarden's (NYSE: JAH) iconic Mr. Coffee is teaming up with Green Mountain to develop single-cup coffeemakers that use Green Mountain's wildly popular K-Cup portion packs. This agreement is similar to the licensing and distribution deal that Conair's Cuisinart struck with Green Mountain earlier this month.

So let's take a roll call of the Keurig army.

  • Keurig parent Green Mountain has done amazingly well. It moved 479,000 single-cup brewers this past quarter, after shipping a whopping 711,000 K-Cup brewers during the holiday quarter.
  • Cuisinart is hitting the market with its K-Cup brewer.
  • And now, so is Mr. Coffee.

"I would hate for Green Mountain to wake up one day and see Mr. Coffee in the mirror," I wrote earlier this year, when I recommended the stock to Motley Fool Rule Breakers subscribers. But I was referring to having this growth stock settling for a life of kitchen hardware. If Green Mountain is staring at Mr. Coffee on the other side of a negotiating table, brokering a deal that will populate the planet with yet more machines that require K-Cup refills, I'm all for that.

See, Green Mountain essentially sells its Keurig machines at cost. The real money comes in the high-margin K-Cup sales. There were 432 million K-Cup refills sold during the company's most recent quarter.

Oh, and that was before Wal-Mart (NYSE: WMT) came onboard, stocking an entry-level Keurig brewer and K-Cup portion packs.

If you're wondering why there's a little more elbow room at your local Starbucks (Nasdaq: SBUX) store, maybe it's because Green Mountain has moved nearly 1.2 million Keurig single-cup brewers over the past two quarters. Don't just blame the McCafe push at McDonald's (NYSE: MCD) when hundreds of millions of java-seeking mugs are being filled quarterly by K-Cups instead.

Who will be the next to enlist in Green Mountain's Keurig army?

Some other Green Mountain sips:

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Green Mountain Coffee Roasters is a Motley Fool Rule Breakers pick. Starbucks and Wal-Mart are Inside Value recommendations. Starbucks is a Stock Advisor recommendation, and the Fool owns shares as well. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz can walk to three Starbucks stores from his home, but he's still not much of a coffee sipper. He's had a Keurig brewer in his home for two years now. Rick doesn't own shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 16, 2009, at 11:06 PM, bigbaballoo wrote:

    These thinks are an environmental nightmare besides costly & will be one of the first items to go with the deepening recession to come.............

  • Report this Comment On June 16, 2009, at 11:16 PM, pumba2003 wrote:

    Another "balanced" appraisal by Ricky! The world's greatest invention--according to Ricky--is the K-cup refill. You know the little specimen cup of some mysterious blend of coffee of unknown origins that sells for $7-9 a box. The box contains 12 of the magical specimens, that equates to 12 cups of coffee or one full pot!

    What a bargin! For $10 you can get a pound of ethically sourced coffee who's origin and pedigree are known, which will result in considerably more than one pot of coffee.

    By the way, the machine includes a filter cup that you can use your own ground coffee--and not a specimen cup--in the Kuerig machine. Maybe that's why Starbucks isn't quaking in its boots. Or maybe for Starbucks it really isn't only about the coffee. Maybe they are a coffee company in the people business.

  • Report this Comment On June 17, 2009, at 4:00 AM, TMFBreakerRick wrote:

    bigbaballoo, but the company has sold 1.2 million brewers during what may have been the six worst months of consumer confidence within the recession.

    pumba, I'm not sure where you're pricing the K-Cups, but I'm picking up 48-packs (two 24-packs) of Timothy's and Coffee People K-Cups for less than $20.

    Regardless of how you break it up in terms of pots of coffee, you're still talking $0.40 for a cup of coffee vs. several times that sum at a SBUX store. Until GMCR sales decline or SBUX comps pick up ...

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