UNIVERSITY OF SCIENCE - VIETNAM NATIONAL UNIVERSITY HCM

INTERNATIONAL TRAINING & EDUCATION CENTER

KEURIG BREWED ® Strategic Management Project

GROUP 10

Le Hoang Kim Duyen – 295895

Tran Nhat Ha – 295921

Nguyen Hoang Hung – 295907

Table of Contents

I. Executive Summary

a. Mission Statement

b. Vision

c. Objectives

d. Strategies

e. Products and services

f. Competition

g. Recommendations

II. SWOT Analysis

III. Where is your product in the life cycle?

IV. What kind of strategy did your company have, and what kind do you need now?

V. Internal Factor Evaluation Matrix.

VI. External Factor Evaluation Matrix.

VII. Competitive Profile Matrix.

VIII. SPACE Matrix.

IX. RAND Matrix.

EXECUTIVE SUMMARY

Founded in 1990 by Peter Dragone and John Sylvan, Keurig set out to revolutionize the coffee

industry by providing a convenient, easy, and delicious way to enjoy a cup of coffee.

Specifically, Keurig believes that coffee should always be served fresh, whether at home or at

the office, just as in a gourmet coffeehouse. In 1998, Keurig released an industrial strength,

single-serve brewing coffee maker that delivered a perfect cup of coffee, hot tea, hot cocoa, and

specialty products every time. Keurig dispenses coffee along with desired condiments such as

cream and sugar but there are no limitations. With 2-in-1 technology furthers the adaptation of

the single-serve lifestyle as a necessary part of one's coffee enjoyment. In 2006, Keurig became a

wholly owned subsidiary of Green Mountain Coffee Roasters. Inc. as a world-wide industry

leader in single-cup coffee brewing technology. Keurig is now a quickly growing company as

they continue to innovate with new brewing technologies, expand their wide flavor selection,

promote their socially responsible business practices, and work hard to bring consumers the

absolute best cup of coffee available.

Mission Statement: Brewing excellence one cup at a time®

Vision: Keurig's vision is to be the leading specialty coffee company by providing the highest

quality coffee, having the largest market share in the targeted market while maximizing the

company value. Keurig intends to achieve this objective by differentiating and reinforcing the

Green Mountain Coffee Roasters and engendering a high degree of consumer loyalty.

Objectives: Due to approximately 24 million coffee brewers were sold in 2012 in the U.S., and

Keurig’s goal was convert half of the 90 million American homes with coffee brewers to Keurig.

Strategies: Keurig identified four main aspects to implement their strategy included new brewer

technologies, new beverage categories, new brands, new channels. First of all, about the

technologies, Keurig expands the Keurig Single Cup Brewing system to include Keurig Vue

brewers and related Vue packs. It launches the Keurig Rivo Cappuccino and Latte System and

Rivo pack espresso blend varieties in partnership with Luigi Lavazza S.p.A. Also, it try to

introduce the GMCR’s Wellness Brewed collection which includes coffees, teas, and “Vitamin

Burst” fruit brew beverages that contained added ingredients like antioxidant vitamins. Secondly,

Keurig try to gain the market share in the office market was to sell machines to distributors and

encourage them to give the machines away or lease them for a small fee. Thirdly, it expands

consumer choice by entering into a number of business relationships, enabling them to offer

strong national and regional coffee brands such as Folgers and Millstone, Dunkin’s Brands, Inc.,

Starbucks coffee, Tazo tea, Eight O’clock coffee, Tetley tea, Good Earth tea, and Snapple tea in

single-serve packs for use with Keurig Single Cup Brewers. Last but not least, it drives Keurig

Single Cup Brewer adoption in North American households and offices to generate ongoing

demand for single-serve packs.

Products and Services:

In the 1990s, Keurig introduced a drip-style machine that provided coffee for those who did not

like espresso. K-Cup® System is an original single-cup brewing maker which is designed to

brew a single cup of coffee, tea, hot chocolate, or other hot beverage. Besides, Keurig also

obtains, produces, and sells various kinds of coffee, teas, cocoa and other form of beverages in

K-cup portion packs and coffee in conventional packaging style. Keurig brews coffee or tea by

piercing the foil seal on top of the plastic K-Cup pack with a spray nozzle, while piercing the

bottom of the K-Cup pack with a discharge nozzle. Grounds contained inside the K-Cup pack are

in a paper filter. Hot water is forced through the K-Cup pack, passing through the grounds and

through the filter. A brewing temperature of 192 degrees Fahrenheit (89 Celsius) is the default

setting, with some models permitting users to adjust the temperature. It sells many models for

use with K-Cup packs, for household and commercial use. Licensed models from Breville, made

by the Australian company of the same name, Cuisinart, and Mr. Coffee all introduced in 2010

are also available. It is believed that it is offering more than two hundred varieties of hot

beverages. In addition to the products, Keurig is providing wide selection of whole beans,

ground coffee in fractional packs and ground coffee selections in bags that can be easily used by

customers of at-home and away-from-home markets.

Furthermore, Keurig improves its technology with the advent of Vue® System as a huge step of

innovation. The Vue system offers more control of the brew with a wider range of mug sizes.

Unlike K-Cups Packs, Vue Packs can be emptied and recycled after use. Some models can read

the RFID tags embedded in Vue packs to select the optimal brew settings for each variety of

beverages automatically and brew coffee at different strengths.

In specifically, in the most recent, Keurig is launched the Rivo® System as the most advent

model which offers the ability to make hot or cold espresso based beverages. Lavazza Espresso

coffee packs are used with this system. Espresso size options are 1.4 or 2.8 ounces and three

frothing modes include cold, cappuccino, and latte.

Competition: Competition in the single-cup brewing system market was increasing a s relatively

low barriers to entry encouraged new competitors to enter the market, particularly with typically

lower-cost brewers that brewed coffee packaged in non-patented pods. There are many currents

and potential competitors had substantially greater financial, marketing, and operating resources

than Keurig such as Nestlé (Nespresso and Dolce Gusto), Kracft (Tassimo), and Mars (Flavia).

Moreover, in the United States single-cup markert, Starbucks and GMCR had annouced in

March 2011 that Starbucks was the “exclusive, licensed super-premium coffee brand produced

by GMCR for the Keurig Single Cup brewing system." According to Keurig, their primary

competitors were Flavia beverage systems (manufactured of Mars), the Tassimo beverage system

(manufactured of Kraft), the Senseo brewing system (manufactured and marketed by Philips and

Sara Lee), and a number of additional single-cup brewing systems and brands. Kraft’s Tassimo

system was made primarily for at-home use, while Mar’s Flavia system targeted offices.

Recommendation: The case study about Keurig coffee helps us to understand deeply the

importance of strategy development along with factors that need to be taken into account when

designing the strategy. It also highlighted the problems being faced by the company along with

competitiveness in business environment. Throughout the case, we can see that the cost of

Keurig is too expensive lead to the product price seems like higher than competitors’ products.

So, Keurig’s revenue might be decreased (limited company resources). Therefore, we suggest

some useful solutions to reduce the cost by the following suggestions:

- It should continue with its innovation strategy by introducing new products in the market.

- With the help of integration, it will be able to lower its transaction costs and bear its efficiency

cost as well.

- It should make changes in its strategies to make sure that it is able to capture its desired market

share.

- It should find out the new market or new customer segments to introduce its products for the

purpose of expanding the sale ratio on global market.

- Improve marketing, advertising and public relations.

- Improve distributors or supplier relationships.

- It should create partnerships with competitors along with following right strategy for

acquisition and mergers.

- It should try to increase firm’s market share.

- It should try to attain lower overall costs than rivals.

- It should try to achieve technological superiority on this industry.

SWOT Analysis:

Strengths:

Firstly, Keurig has a strong brand in the field of the single-serve brewing coffee. It is introduced

in 1997. Hence, the partnership is one of the largest strengths of Keurig compared to other

competitors. Currently, Keurig has solid brand partners such as Green Mountain Coffee®,

Diedrich Coffee, Inc., Gloria Jean’s Coffee, Timothy’s World Coffee of Canada, Van Houtte

Inc., Ueshima Coffee Company of Japan (UCC), Celestial Seasonings, The Bigelow Tea Co.,

Ghirardelli, Twinings of London, Tully’s Coffee Co., Newman’s Own Organics, Caribou Coffee,

Coffee People that help Keurig take more opportunities to get a competitive advantage in the

market place.

The second strength of Keurig is related to the patented technology. Keurig has several patents

about its single-serve coffee machines. It seems like a superior technology. These patents cover

the way to brew a cup of coffee by the coffee maker and use the coffee maker. Keurig makes a

profit not only from the sale of the coffee machine but also selling its single-use coffee cartridge.

Thirdly, Keurig is available in many different distribution channels. It is one of the main

strengths of Keurig. A good instance for this view is that Keurig sell over 100 coffee categories

through the coordinated multi-channel distribution network. Multiple distribution channels are

designed to maximize Keurig’s brand recognition and product availability. Keurig products are

served for supermarket, specialty food store, convenience store, food service, hotel, restaurant,

university, travel and office coffee service customers. It helps almost customers can exposure

closer with various brands as well as easily to access to convenience products.

Last but not least, the variety of product is a competitive advantage of Keurig. The large majority

of customers said that they feel enjoy with Keurig products and services. It is really quick and

clean, efficient and convenient for next using. Moreover, Keurig products are eco-friendly

products with the natural environment.

Weaknesses:

We know that weaknesses refer to the internal conditions of the firm and where it may be lacking

relative to competitors. Therefore, our company identify the expense of systems that it is a

weakness of the brand. Moreover, Keurig has not spent a great amount of their money for

advertising. That is why it is little brand name presence in world. Beside that GMCR cannot

forecast the demand for K-Cups and have warranty issues as well as no system in place to

handle. Finally, GMCR depend on certain retailer for a substantial portion of revenues.

Opportunities:

In March 2012, GMCR launched Vue brewing machine which is next generation pod brewer that

proposes a variety of some advanced elements as evaluated to standard and modern Keurig

machines. They have been changed with innovative technologies that support demands of

consumer in getting coffees consistent with their tastes and choices. Moreover, consumers can

take control on their drink’s strength, temperature that should be set for brewing, generally it is

related to the brewed and wide range of options to choose from for brewing other drinks like café

beverages such as lattes. GMCR can participate in prosperous market, and carry out promotion

of its specialty coffee as a supplement to this latest presentation i.e. Keurig Vue.

Furthermore, there is a high perception in the market via competitors as partnering with other

coffee manufacturers like Folgers and Caribou Coffee, GMCR can enhance its brand image in

the market. Also, GMCR raises supply of K-Cup packs for competitors so its Keurig products

get more and more popular in the market.

In addition, there are wide options for expansion in other regions. In the last couple of years,

coffee consumption has been grown in Asia, Europe and Brazil so by getting target and creating

effect on more coffee drinkers in these countries, GMCR can obtain the competitive advantage

by entering in these markets before its competitors identify this opportunity.

Threats:

Firstly, decrease in coffee consumption in United States market, coffee consumption has fallen

dramatically, specifically it only reaches to 20% of coffee expenditure worldwide. Europe and

Asia are the countries that have capacity of targeting coffee drinkers.

Secondly, there is a high competition, majority of companies are arriving specialty coffee

industry and since there are low barriers to entry, there is an enormous possibility that number of

competitors will get double in next five years.

Next, another problem is related to price volatility, the cost of products is likely to change

suddenly which can be dangerous for GMCR as it is trying to maintain its low cost production

advantage. The coffee suppliers can even change their prices and may start charging high rates

considering the growth in this industry. There is high uncertainly for coffee supplier contracts in

future that can cause difficulty in future profits.

Finally, there is a heavy dependence on specialty coffee farms. Therefore, GCMR counts on

these farms to get best coffee beans for creating perfect coffee blend. If productivity is poor or

weather conditions are not favorable, then farming of specialty coffee beans will be adversely

affected which would create problem for GMCR as it will have low level of inventory and will

be unable to fulfill customer orders on time.

Where is your product in the life cycle?

Keurig product belongs to the maturity stage in the product life cycle. The U.S single-cup market

was dominated by GMCR with its cartridge-based Keurig K-cup brewing system. One of the

most valuable evidences for this view is that there were approximately 2.6 million coffee

brewers in offices nationwide serviced by a network of approximately 1,700 distributors in 2012.

Of those offices, GMCR accounted for about half of those were Keurig brewers. Keurig brewers

were to be in 30 percent of offices in England, national penetration in the office channel was

about 6 percent. Another valuable evidence suggests that Keurig maintained the quality products

to easy to use features, and innovative technologies earned Keurig high marks in customer

satisfaction, with 94 percent customer satisfaction from tracked brewer purchasers. According to

the statistics in this case, single-serve coffee machines accounted for 20 percent of total coffee

machine volume sales in 2012, up from 4 percent in 2006. Total coffee maker sales were

projected to increase by 20 percent from 2011 to 2016, largely driven by pod machine expansion.

Consequently, fresh-ground-coffee pods were expected to lead growth within coffee from 2011

to 2016, with off-trade volume growth of 74 percent. Furthermore, as of March 2012, between

10.8 and 12.2 million Keurig brewers were to be in use in the U.S. As of 2006, more than 1

billion cups of Keurig Brewed coffee and tea had been consumed since Keurig launched in 1998.

GMCR continued to be the leading K-cup roaster, representing 57 percent of K-cups shipped in

fiscal 2008. As of 2008, more than 2 billion K-cups had been shipped since 1998.

What kind of strategy did your company have, and what kind do you need now?

GMCR applied the differentiation strategy, specifically GMCR identified four vectors as part of

a growth strategy for Keurig as new brewer technologies, new beverage categories, new branch,

new channels. Moreover, it also focused on continued innovation, both in single-serve brewing

systems and other single-serve beverages. Some of GMCR’s 2012 initiatives included:

An expansion of the Keurig Single Cup Brewing system to include Keurig Vue brewers and

related Vue packs;

A launch of the Keurig Rivo Cappuccino and Latte System and Rivo pack espresso blend

varieties in partnership with Luigi Lavazza S.p.A. ( Lavazza); and

An introduction of GMCR’s Wellness Brewed collection which included coffees, teas, and

“Vitamin Burst” fruit brew beverages that contained added ingredients like antioxidant vitamins.

In addition, management was focused on executing on the above stated growth strategy to drive

Keurig Single Cup Brewer adoption in North American households and offices to generate

ongoing demand for single-serve packs. Also, with many single-serve beverage brands across

multiple beverage categories, GMCR offered more than 225 individual varieties, allowing

consumers to enjoy and explore a wide range of beverages. Furthermore, achieving a variety of

brands of coffee and tea, GMCR also produced and sold hot apple cider, iced teas, iced coffees,

iced fruit brews, hot cocoa, and other dairy-based beverages in single-serve packs. Also, it

continued expanding consumer choice in the Keurig Single Cup Brewing system by entering into

a number of business relationships, enabling them to refer some strong national and regional

coffee brands such as Folgers and Millstone (owned by The J.M. Smucker Company),

Dunkin’Brands,Inc., Starbucks coffee and Tazo tea, Eight O’Clock coffee, Tetley tea, Good

Earth tea, and Snapple teas in single-serve packs for use with Keurig Single Cup Brewers.

Now, GMCR need maintain profitable, strategic relationships with well-recognized coffee

brands. Also, they can expand their system and officers in other market, and attract some huge

coffee brands in other to create the strong business relationships for ensuring long-term growth,

the health of the overall business.

Key external factor Weight Rating Weighted score

Opportunities

Global market typically untapped 0.15 1 0.15

Increasing in the growth of industry 0.15 2 0.3

Quality consided important by consumers 0.10 2 0.2

Increasing trend of specialty coffee drinkers 0.15 3 0.45

Threats

Decline in coffee consumption 0.1 1 0.1

High competition 0.1 2 0.2

Price volatility 0.05 2 0.1

Heavy reliance on specialty coffee farms 0.2 2 0.4

1.0 3.0

External Factor Evaluation Matrix

Key internal factor Weight Rating Weighted score

Internal Strength

The patented technology 0.05 4 0.2

Large variaties 0.1 3 0.3

Quality of product 0.1 4 0.4

Longer shelf life of product 0.1 4 0.4

Customer brand loyalty 0.05 4 0.2

Brand awareness 0.1 4 0.4

Internal Weakness

Past failure strategic decision 0.2 2 0.4

Inappropriate strategic vision 0.1 1 0.1

Little brand presence 0.1 1 0.1

Few strategic alliances 0.1 1 0.1

1.0 2.6

Internal Factor Evaluation Matrix

Competitive profile matrix

Starbuck Procter gamble Nestle

Critical success factors Weight Rating Score Rating Score Rating Score

Advertising 0.1 1 0.1 3 0.3 3 0.3

Product quality 0.2 2 0.4 1 0.2 1 0.2

Price competition 0.05 2 0.1 2 0.1 1 0.1

Management 0.1 3 0.3 3 0.3 4 0.4

Financial position 0.1 3 0.3 4 0.4 4 0.4

Customer loyalty 0.15 2 0.3 1 0.15 1 0.15

Global expansion 0.15 4 0.6 4 0.6 4 0.6

Market share 0.15 3 0.45 4 0.6 4 0.6

Total 1 2.55 2.65 2.75

SPACE Matrix

Internal Strategic Position External Strategic Position

Financial Strength

• Return of investment: 6

• Financial and operating leverage: 5 • Liquidity: 6

• Working capital: 4 • Cash flows: 5 Average: 5.2

Industry Strength

• Growth potential: 5

• Profit potential: 6 • Financial stability: 6

• Resource availability: 4 • Ease of entry: 5 • Capacity utilization: 3

Average: 4.8

Competitive Advantage

• Market share: -5 • Quality: -2 • Product life cycle: -2

• Customer preference: -2 • Technological innovation: -1

• Sound supply chain: -2 Average: 2.3

Environmental Stability

• Technological changes: -5 • Inflation: -5 • Demand elasticity: -5

• Competitor’s price ranges: -1 • Barriers to entry: -3

• Competitive pressure: -6 • Ease of exit: -5 • Price elasticity of demand: -5

• Risk exposure: -3 Average: 4.2

Total axis X score: 1.0

Total axis Y score: 2.5

Keurig has the financial strength rank of around 5.2 accounted for approximately 80% in 2012. It

shows strong financial strength and is unlikely to fall into distressed situations. According to the

statistic on the Gurufocus webpage, the financial strength rank measures how strong a company

financial situation is. It is based on the following factors:

• Keurig has a high ROI with 0.67 compared to the industry, the variable can have a 6

score.

• Keurig’s change in working capital that ended in Sep. 2012 was $84 mil. It means

Keurig’s working capital declined by $84 mil comparison with the whole market, so the variable

can have a 4.

• Keurig’s liquidly ratio that ended in Sep. 2012 was nearly 125%. Therefore, the variable

cans probably a 6 score.

• Keurig’s financial and operating leverage ended in Sep. 2012 was nearly 76%. Therefore,

the variable cans probably a 5.

• Keurig’s resource availability ended in Sep. 2012 was nearly 59%. Therefore, the

variable cans probably a 4 score.

• The quality of Keurig is better than 86% of the other companies in its peer group with

91% so the variable can be probably a -2 score

• The product life cycle of Keurig is quite stable and there were approximately 2.6 million

coffee brewers in offices nationwide serviced by a network of approximately 1,700 distributors

in 2012, so the variable may be a -2 score

• The Cash flow of GMCR is quite high with other competitors due to its net income got

582.42M, this value is extremely high in competitive market, so the variable can have a 5 score

• The large majority of customers said that they feel enjoy with Keurig products and

services. It is really quick and clean, efficient and convenient for next using. Moreover, Keurig

products are eco-friendly products with the natural environment. Hence, Keurig’s customer

preference is very good, and the variable can have a -2 score.

• Through improving of both single-serve brewing systems and other single-serve

beverages in 2012 with the technological innovation of GMCR:

An expansion of the Keurig Single Cup Brewing system to include Keurig Vue brewers and

related Vue packs. A launch of the Keurig Rivo Cappuccino and Latte System and Rivo pack

espresso blend varieties in partnership with Luigi Lavazza S.p.A. ( Lavazza). An introduction of

GMCR’s Wellness Brewed collection which included coffees, teas, and “Vitamin Burst” fruit

brew beverages that contained added ingredients like antioxidant vitamins. Therefore, the

variable can have a -1 score.

• The coffee suppliers can even change their prices and may start charging high rates

considering the growth in this industry. There is high uncertainly for coffee supplier contracts in

future that can cause difficulty in future profits. Thus, the sound supply chain of Keurig is not

strong and the variable is a -2 score.

• The inflation of Keurig is very low with 0.2% compare to other companies, so the

variable is a -5 score.

• The average percentage of Keurig’s product price is around $41.8. It is higher than

Starbucks Corporation price with 31.28% in Jan. 26 2012. Hence, the variable is able to get a -1

score.

• The barriers to entry toward Keurig is low; therefore, the variable can take is a -3 score.

• The competitive pressure of Keurig is low compare to several new entrants or old rivals

because Keurig is a pioneer in the field of making single-serve system as well as it has a solid

foundation about features. So, the variable is a -6.

• There is an enormous possibility that number of competitors will get double in next five

years. Besides, market share of Keurig can probably increase with other competitors so the

Keurig is not easy to exit in this major industry, and the variable may be a -5 score.

• The price elasticity of demand is high because the production of Keurig depends on the

preference level of consumers, and price of goods can change by the production, so the variable

can have a -5 score.

• Risk exposure of Keurig is low because its PEG (5 years expected) as 1.86 is stable but it

is also limited by problems of coffee suppliers and price volatility, high competition so the

variable may be a -3 score.

• The quarterly revenue growth of GMCR is highest in competitive market as 0.06, P/E

(ttm) is quite high as 32.45 than some competitors, and so its growth potential is extremely

strong, and the variable can have a 5 score.

• GMCR’s EPS is highest in competitive market, and its profit potential is evaluated as

strength level so the variable cans probably a 6 score

• The market share of GMCR have an increased trend because the quantity current

competitors of this major increase rapidly, and Keurig supplied its product to competitors as a

distributor so the variable may be a -5 score

• According to the values of operating margins and net income of GMCR as 0.2 and

582.42M, the numbers is highest than other competitors so the financial stability is ensured well,

and the variable is a 6.

• The Keurig is able to make the product becomes popular , especially it is outstanding

about single K-cup system in US so its barriers is more low than other competitors in this

market, and the Keurig can be more easy to entry as well as the variable can probably a 5 score.

• According to the market capitalization of Keurig is not high, it only gains 18.68B than

other competitors in market, and this value is considered as a medium level for capacity

utilization of Keurig, so the variable can have a 3 score.

• The technological change of Keurig is related to the patented technology. It has several

patents about its single-serve coffee machines. It seems like a superior technology. These patents

cover the way to brew a cup of coffee by the coffee maker and use the coffee maker. Also, it

makes a profit not only from the sale of the coffee machine but also selling its single-use coffee

cartridge. Hence, the variable can have a-5

RAND Matrix

The position of Keurig (GMCR) in the quadrant one of the Grand Strategy Matrix that is meant

for those firms which are in a strong competitive position and flourishing with rapid market

growth. Based on case 34 in the book, we find out evidence to demonstrate Keurig in the

quadrant one of the Grand Strategy Matrix.

According to Euromonitor International, the retail volume of fresh-ground-coffee pods in the

U.S. grew by over 500 percent from 2006 to 2011. Pod machines had become increasingly

popular in workplaces and households with pods now available in mainstream grocery stores and

hypermarket, led by the products from food-service. Moreover, fresh ground coffee were

expected to lead growth within coffee from 2011 to 2016, with off-trade volume growth of 74

percent. Many forecasted that the global economic downturn would temper demand for pods, as

they were both priced and positioned as a premium product. Manufacturers continued to provide

consumers with customization and price segmentation, pods were forecasted to continue taking

market share from other coffee types. The Keurig found success in the United States, while the

higher-priced Nespresso had struggled, owning to Keurig’s speed and ease of use producing a

high-quality cup of coffee more appealing for American consumption, rather than the European

coffees that Nespresso recreated. Combining this with the licensing agreements between Keurig

and many popular specialty coffee brand like Caribou, Starbucks, and Dunkin’ Donuts, U.S.

consumers were using the machines to recreate the on-trade experience, giving a perception of

quality at lower price points. With single-serve brewer penetration increasing in U.S. households

and players such as Starbucks entering the premium brewer market, exposure for single-cup

machines had been forecasted to increase the double digit growth of the single-serve market.

Approximately 24 million coffee brewers were sold in 2012 in the U.S., and Keurig’s goal was

to convert half of the 90 million American homes with coffee brewers to Keurig. Keurig initially

focused on the away-from-home commercial segment of office users. Increasing demand and

brand awareness enabled Keurig to move to a multichannel strategy, providing widespread

exposure to consumer trial.

Keurig brewers were estimated to be in 30 percent of offices in New England, national

penetration in the office channel was only about 6 percent. Moreover, Keurig continued working

with its network of Keurig Authorized Distributors to execute office acquisition plans and

conduct lead generation, demonstrations, and samplings program to build Keurig’s office coffee

business. In addition to Keurig’s traditional distributor network, customers such as Office Depot

and Staples were helping Keurig grow through their business to business solution for both large

and small office applications. Another away-from-home single-serve opportunities Keurig

identified was the hotel market.

In January 2007 Keurig, Inc., and Caribou coffee, the second-largest publicly traded gourmet

coffee company in the United States in terms of number of retail stores, announced a partnership

to market Caribou’s gourmet coffee in the Keurig K-Cups. In September 2008 GMCR

announced an assets purchased agreement to acquire the Tully’s coffee brand and wholesale

business.

GMCR continued expanding consumer choice in the Keurig Single Cup Brewing system by

entering into a number of business relationships, enabling them to offer strong national and

regional coffee brands such as Folgers and Millstone, Dunkin’s Brands, Inc., Starbucks coffee

and Tazo tea, Good Earth tea, and Snapple teas in single-serve packs for use with Keurig Single

Cup Brewers.

GMCR identified four vectors as part of a growth strategy for Keurig:

• New brewer technologies

• New beverage categories

• New brands

• New channels

GMCR also focused on continued innovation, both in single-serve brewing systems and other

single-serve beverage. Some of GMCR’s 2012 initiatives included:

• An expansion of the Keurig Single Cup Brewing system to include Keurig Vue

brewers and related Vue pack.

• A launch of the Keurig Rivo Cappuccino and Latte System and Rivo pack

espresso blend varieties in partnership with Luigi Lavazza S.p.A

• An introduction of GMCR’s Wellness Brewed collection which included coffees,

uteas, and “Vitamin Burst” fruit brew beverages that contained added ingredients

like antioxidant vitamins.

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http://www.greenmountaincoffee.com/

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%2Bfrom%2BOperations/Keurig%2BGreen%2BMountain%2BInc

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mcjIDc2EtZ3AEZ3ByaWQDBG5fZ3BzAzcEb3JpZ2luA2ZpbmFuY2UueWFob28uY29tBHBvc

wMxBHBxc3RyAwRxdWVyeQNHTUNSLARzYWMDMQRzYW8DMQ--

?p=http%3A%2F%2Ffinance.yahoo.com%2Fq%3Fs%3DGMCR%26ql%3D0&type=2button&u

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http://www.nasdaq.com/symbol/gmcr/financials

http://www.grin.com/en/e-book/111348/coffee-shop- industry-a-strategic-analysis