Today, analysts Brendan Byrnes and Austin Smith discuss how Green Mountain Coffee Roasters makes its money. The company uses a razor-and-blades model, where it sells a machine essentially at cost but generates profit on high-margin parts. For GMCR, its low-cost Keurig coffee brewers guarantee repeat business for its high-margin, refillable K-Cup pods.
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Austin Smith has no positions in the stocks mentioned above. Brendan Byrnes has no positions in the stocks mentioned above. The Motley Fool has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters and short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Green Mountain Coffee Roasters and The Procter & Gamble Company. 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.