It's been a banner year for Green Mountain Coffee Roasters (UNKNOWN:GMCR.DL). The stock is up almost 110% year to date, and last quarter the company grew revenue by 11% over the previous year. With that kind of momentum behind it, the company announced a whole new product line yesterday: soup. Green Mountain piled in with Campbell Soup (NYSE:CPB), and next year you'll be able to buy soup pods for your Keurig brewer.
A soup-er idea
You would be forgiven for thinking that this was mainly a win for Green Mountain, since it seems to open up a whole new customer base. In reality, this is an equally important deal for Campbell. The canned soup market has dropped at least 10% since 2002, and the company was forced to shut down some production facilities last year in the face of the decline .
Even so, Campbell has managed to push through the tough times, and in its last fiscal year, it increased revenue by 13.4%. Apart from a charge associated with the company's intangible value in Europe, the business did well in fiscal 2013, and the stock is up 23% year to date.
The clear benefit for Campbell is a newer distribution channel that has been growing at a fast clip for the past few years. I think the biggest benefit for both companies is actually the opportunity for soup with the new commercial-grade brewer from Green Mountain. The company announced an office-focused brewer back in July, and the addition of soup to that setup sweetens the pot.
The future of coffee-soup
This is a great little tie-up for both companies, though it's not a fortune-maker for either. What it does show is that Green Mountain is still interested in meaningful, consumer-focused innovation. The company now has ways to help you make coffee, tea, and soup, along with other hot drinks. Soup just helps cement the value of existing brewer bases, and gives those on the fence about buying a base one more reason to jump in.
For Campbell, it's another way to get the iconic brand into homes, and it gives the business a way to play with new flavors and production methods that lend themselves to quick heating and brewing. (If you were wondering, don't worry, you won't be left in the cold if you like the chunkier soups. The products come with a packet that contains all the bits, while the brewer simply does the heavy lifting of heating the product.) Also, now you don't get stuck with liquid-gold hot soup from the microwave -- your soft palate is going to thank you.
Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters. 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.