Green Mountain Coffee Roasters Inc. (GMCR) is Losing its Taste! – Starbucks Corporation (SBUX)

Things have not been going so well for Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) lately, and it’s losing the taste for profits. There are many reasons for the decline in profits, including patent expiration, terrible promotions, and new products that just aren’t taking off as they should be. Despite these problems Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s share price still wants to edge higher, going from $45 a share in early February to where it is now at $54 a share in March. So what is causing this rise in stock price? Can it be justified considering all the problems the company faces? Let’s take a close look at the financials and competitors and see just how much value Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) can generate for investors.

Patent Expiration is a Drag

As of September 2012 the patents on the K-cup expired, and this didn’t seem to help the bottom line for Green Mountain Coffee. As we know from other corporations, patent expiration is never fun to deal with.  There are many competitors who are launching their own K-cup products, and the sad part is that Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) receives no royalty payments from these products. The patent expiration kind of forced the company to start doing outrageous promotions just to keep customers buying its K-cup products. One promotion was for an online coupon that allowed customers to take $10 off for any products purchased that were $10 or more. In essence the company was giving away coffee for free just to show more sales and possibly to bring new customers to its brand of products.

New Product to the Rescue

So with the patent expiration problem and having to do a promotion that causes losses in revenue, what can be added to the pipeline of products that will help turn the company around. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has now unveiled the new “Vue V500 Brewing system.” This new product is added to the list of other Kuerig Vue products that combines the Kuerig’s single serve ability with popular customizable features of the Vue system. I think it is good that Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is taking the initiative to deal with its patent expiration and slowing sales of its K-cup products. Whether or not this new system will serve investors with future profits remains to be seen, but I think Green Mountain Coffee will have to handle a lot of pressure from its competitors to stay alive in the coffee business.