Green Mountain Coffee Roasters Inc. (GMCR), Starbucks Corporation (SBUX): The Great Coffee Conundrum

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The reason we’ve seen this bifurcation is simple: These three behemoths can purchase large enough quantities of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), which locks in the lowest possible price. Local shops don’t have the same luxury when it comes to buying capacity, which means they’re still paying well over the market rate in many cases for Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). With most large-chain coffee houses and wholesale brewers like Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) having no incentive to compete against locally owned coffee shops, they can simply keep their price on par with local shop prices and reap the benefits of a growing margin as coffee prices continue to fall.

While this completely stinks for the American consumer, it’s fantastic news if you’re a shareholder in Starbucks Corporation (NASDAQ:SBUX), Dunkin Brands Group Inc (NASDAQ:DNKN), or Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), because all three are going to continue to benefit if Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) prices continue to march lower.

We have reached what I think is the great coffee conundrum: How do consumers reap the benefits of lower coffee prices if supply is essentially no longer relevant with the bulk of the buying in the hands of a few large coffee houses?

If you have the answer to that question, I’d love to hear it in the comments section below.

The article The Great Coffee Conundrum originally appeared on Fool.com is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Starbucks. It also recommends Green Mountain Coffee Roasters.

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