Esio Beverage Poses Competition to Green Mountain

Green Mountain Coffee Roasters (NASDAQ:GMCR) sells more than 200 varieties of K-Cup portion packs including brands of coffee, tea, hot apple cider, iced teas, hot cocoa and other dairy-based beverages. Recently, Esio Beverage, a new single-serve beverage maker, announced its plans to sell its single-serve beverage machine at retailers, including Wal-Mart (NYSE:WMT). We believe this could pose some competition to GMCR which presently enjoys a dominant position in the single serve coffee market, especially if it can team up with a major distribution channel like Wal-Mart. In coffee makers, GMCR competes with Robert Bosch, Nestle, Mars, Bunn-O-Matic and Phillips Electronics, among others.

See our full analysis of Green Mountain Coffee Roasters here

Competition Intensifying in Niche Single Serve Coffee Market

• Single serve coffee formats, a category that was in the nascent stage approximately five years ago, now accounts for 7.5% of the U.S. retail coffee sales, according to Packaged Facts. ^[1] The single serve market has been a major growth driver of the overall coffee industry in the U.S. According to a recent study by National Coffee Association of USA, penetration in the single serve space is growing at an average of 1% per year.
• GMCR has a dominant position in this market. Its K-Cup portion packs and Keurig single-cup brewers and related accessories contribute a significant proportion to its revenues, with an approximate share of 84% in 2011.

The introduction of Esio Beverage System at Wal-Mart stores could pose stiff competition to GMCR. Going by reports, the price per serving is expected to be much lower than the average cost of Keurig’s K-Cups, which range from 60 cents to 90 cents each. However, we believe that Esio Beverage will have to work on building its brand name in the single serve coffee industry. GMCR being a market leader enjoys a loyal customer base and strong brand recognition.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Single-Serve Now 7.5% Of U.S. Coffee Sales, Media Post [↩]