Monday, December 19, 2011

Is The Future Of GreenMountain Uncertain?

News hit on Thursday on Bloomberg and The Street that analysts are downgrading GMCR (Green Mountain Coffee Roasters) to sell amidsts reports of rising inventory and weakening demand.

“Shipments of Keurig brewers will continue decelerating,”said Astrachan, who advises selling the shares. In turn,“slowing household penetration of brewers will increasingly pressure K-Cup shipments,” he said.
Even more damagingly, Green Mountain's patents for K-Cups are expiring, opening up competition and taking a large chunk away from Green Mountain
Next year, Waterbury, Vermont-based Green Mountain will lose the main patents on K-Cups, allowing competitors to make less-expensive versions. The company has sought to boost sales and discourage competition by partnering with brands such as Starbucks Corp. (SBUX) and Dunkin’ Brands Group Inc.
It appears as though the free ride is over for Green Mountain. The company does deserve credit for bringing  a new product to an old industry and giving convenient access of single cup coffees to millions of people. Only time will tell however, just how prepared they are for a competitive market once their patents expire. It's good news for consumers, who can expect lower prices, more availability in the Canadian market and more innovation in 2012.

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