Green Mountain Coffee Goes After Affluent Customer

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Green Mountain Coffee Roasters(GMCR) is launching Vue, a new single-serve coffee maker, in an effort to attract more affluent customers.

Vue will be priced at about $250 which is more than twice the price of a traditional Keurig brewer. The newly launched brewer has additional features that could adjust water pressure, timing and airflow to brew different ways and also includes separate dairy frother packs for adding foam.

GMCR is expected to start selling Vue in the next few weeks. GMCR faces stiff competition from Nestle, Mars, Kraft(KFT) and Philips Electronics(PHG), among others.

See our full analysis of Green Mountain Coffee Roasters here.

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. 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, the penetration in the single-serve space is growing at an average of 1% per year for coffee sales, according to Packaged Facts.

In the near future, GMCR is expected to face stiff competition from Wal-Mart(WMT) as the latter is planning to introduce a more reasonable line of brewers at its stores. 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.

GMCR is focusing on innovation in order to maintain its dominant position in the once nascent single-serve market. It is currently working with Lavazza to co-develop a new single serve espresso machine for North American consumers that would complement its Keurig single cup brewers. It is expected to be a direct competitor to the Nespresso machines by Nestle.

With GMCR's patents on the K-Cup coffee packs due to expire in September this year, it becomes all the more important for GMCR to keep innovating in order to stay ahead of competitors.

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