Starbucks Corporation (SBUX), Dunkin Brands Group Inc (DNKN), Green Mountain Coffee Roasters Inc. (GMCR): Coffee Roasts, Explosive Growth

In a saturated coffee market filled with heavyweights such as Starbucks Corporation (NASDAQ:SBUX) and Dunkin Brands Group Inc (NASDAQ:DNKN), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) continues to carve out a niche for itself, posting stratospheric growth in the process.

Green Mountain Coffee Roasters Inc. (GMCR)In the past three years, Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s annual earnings have grown an average of 77% and most recently, for its second fiscal quarter of 2013, it reported EPS of $0.93, handily beating analyst expectations by $0.20.

The company’s main source of revenue is its single-serve coffee business: Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) sells single-serve coffee packs, coffee brewers and complementary accessories. The company dominates the single-serve market with about 60% of the market share. This market is the fastest growing segment of the coffee industry, with sales of single-serve machines growing 523% from 2006 to 2011.

One of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s major advantages over other single-serve competitors is its ability to leverage its market-leading status to create partnerships with companies, in turn offering its customers an unrivaled array of beverage choices. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) already has partnered up with Dunkin Brands Group Inc (NASDAQ:DNKN), Unilever, Conagra, and The J.M. Smucker Company (NYSE:SJM) and now offers over 200 varieties of coffee, tea, hot cocoa, and iced beverages through its K-cups.

Recently, Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) and Starbucks Corporation (NASDAQ:SBUX) significantly expanded their strategic partnership. In March 2011, the companies partnered up to offer Starbucks Coffee K-Cup packs for the Keurig. With more than 850 million of these packs sold, Starbucks Corporation (NASDAQ:SBUX) and Green Mountain have now signed a minimum five-year agreement that will triple the number of Starbucks Corporation (NASDAQ:SBUX) products and affiliated brands offered on the Keurig platform. This also cements the Keurig’s status as the exclusive low-pressure single-cup brewing system serving Starbucks Corporation (NASDAQ:SBUX) products.


Moreover, Green Mountain’s close relationship with Starbucks Corporation (NASDAQ:SBUX) effectively rules out Starbucks as a near-term threat to Green Mountain. After Starbucks came out with its high-pressure single-cup brewing system, Verismo, many expected it to significantly chip away at Green Mountain’s bottom line. They predicted that Starbucks will brazenly position itself as a direct competitor to Green Mountain and, in turn, push its way into the single-serve market.
Yet, after the expansion of the Starbucks-Green Mountain partnership and a recent dual appearance by the CEOs of both companies on CNBC, it is obvious that Green Mountain and Starbucks see cooperation as more valuable than competition with each other.