Coffee Bean Drinks in K-Cup Packs

Zacks

Coffee and Tea lovers now have two specialty coffee giants come together as the oldest and largest privately held specialty coffee retailer The Coffee Bean & Tea Leaf and Green Mountain Coffee Roasters Inc. (GMCR) have joined forces to launch the Coffee Bean & Tea Leaf K-Cup for Keurig single-cup.

The Coffee Bean & Tea Leaf K-Cup packs will be available by spring 2014 through various channels to the U.S. customers. The pact furthers Green Mountain’s goal of sustaining its dominance in the single-serve brewing world even after the patents for K-cups expired in Sep 2012.

The Keurig business unit of Green Mountain is a pioneer and a leading manufacturer of gourmet single-cup brewing systems. It sells beverages produced by other business units of the company through At Home and Away From Home channels.

The tie up will benefit Coffee Bean & Tea Leaf by boosting sales of its beverage among Keurig fans. It is expected that the package of refreshing tea and coffee combined with the convenience of Keurig brewer will be more popular. Green Mountain sells K-Cups under different brands including Caribou Coffee, Gloria Jean’s and Van Houtte.

Green Mountain Coffee aims at popularizing the single-cup brewing system in America and has therefore entered into several strategic distribution agreements to rope in popular brands like Dunkin’ Brands Group Inc. (DNKN) and Starbucks Corporation (SBUX) into its portion pack system.

In Mar 2013, Green Mountain signed a deal with Unilever Plc, (UL) for the distribution of Lipton’s products in K-Cups. Again, in the same month, Snapple and Green Mountain joined hands to launch the delicious Snapple K-Cup packs for Keurig single-cup brewers.

Through these agreements, Green Mountain is aligning with the strongest beverage brands to support a range of consumer choices and taste profiles in Keurig Single-Cup Brewing system.

In May 2012, the company secured a multi-year agreement with Eight O'Clock Coffee Company, by virtue of which the brands like Eight O' Clock coffee, Tetley tea and Good Earth tea were made available in K-Cup and Vue packs for the Keurig Single-Cup Brewing system.

The company is also upgrading its Keurig brewing system to attract more customers in the face of increasing competition from new entrants, like Starbucks Corporation. The launch of Starbucks' own single-cup at-home coffee machine called Verismo in mid-October forced Green Mountain to roll out affordable and innovative products to capture market shares.

GreenMountainis also focusing on competing with private labels, as it has entered into an agreement with Costco Wholesale Corp. (COST) Under the agreement, Green Mountain will produce private-label Costco Kirkland and Signature brand K-Cup packs for the Keurig single-cup brewing system. Shares of Green Mountain currently carry a Zacks Rank #1 (Strong Buy).

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