Green Mountain wins with Dunkin' K-Cups
A strong lineup of brands will help the company claim more than 40% of the at-home coffee-drinking market, one analyst says.
By Miriam Reimer, TheStreet
Already the clear leader in the single-serve coffee market through the success of its Keurig brewing system, Van Winkle said he raised his market share expectations for Keurig from 15% to 25% and then to 30%, but sees the one-cup brewer garnering upwards of 40% market penetration "given the strong line-up of brands available and further innovation lying ahead."
He specifically mentioned the Dunkin' Donuts brand of K-Cups -- single-serve pods used to brew a cup of coffee with the Keurig machines -- as a way Green Mountain is making gains towards deeper market share.
"All aspects of the Dunkin' distribution deal appear to meet our prior expectations," Van Winkle noted. "Stores report strong early sales and each store merchandised the K-Cup prominently in a freestanding display."
Dunkin' Donuts stores in select markets like Maine already sell K-Cups, at $11.99 for a 14-count box, with distribution set to begin in July for an August 1 launch across the rest of New England.
Green Mountain said it expects the popularity of its Keurig one-cup brewing system to continue growing at a steady clip in the U.S., especially as brands like Dunkin' Donuts, Starbucks (SBUX) and ConAgra's (CAG) Swiss Miss offer brewing pods for the system.
Later this year, Starbucks and Tazo tea-branded K-Cup single-serve pods will be available for Green Mountain's Keurig machines.
As part of its deal with Green Mountain, Starbucks will sell the Keurig machines in its stores and through specialty retailers as early as 2012. Starbucks expects the deal to generate around $1 billion.
Green Mountain shares were soaring 5% to $79.84 on Tuesday.
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