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Coffee Service Operators Gain Success Together
Green Mountain Coffee Roasters is riding the success of specialty coffee on every front through its association with Keurig single-cup brewers and specialty coffee.
Green Mountain Coffee is even finding success with the more recent homeowner single-cup business. The company ships coffee directly to homeowners who have the homeowner Keurig machine. This also represents a growth opportunity for coffee service operators; coffee service operators can sell single-cup units and coffee to their customers for home use.
Nor should coffee service operators discount the success Green Mountain is having in the foodservice segment. Commercial foodservice establishments are beginning to learn about the benefits of providing specialty coffee. Coffee service operators often view the foodservice sector as a competitive channel, which it is, but it also offers a growth market. Coffee service operators can gain significant sales volume serving foodservice customers.
The specialty coffee business still offers significant growth opportunity to the coffee service industry. But for coffee service operators to share in this success, they must invest in the better quality products and equipment.
Green Mountain Coffee Roasters Inc. announced net sales for the first quarter, ended Jan. 14, 2006, increased 26.8 percent to $63.9 million, up from $50.4 million in the first quarter of 2005. Total coffee pounds shipped were up 18.5 percent to 7.5 million pounds. Net income for the quarter increased 23.9 percent to 3 million, or $0.38 per diluted share, compared to $2.4 million, or $0.32 per diluted share for the first quarter of 2005.
Dollar sales growth was strongest in the office coffee service channel, contributing a third of the sales increase. Office coffee pounds were up 26.7 percent over the prior year. The high growth in this channel was due to strong K-Cup sales, driven by increased penetration of the Keurig B100 brewers in small offices, by the introduction of "Extra Bold" K-Cups, and by the continued success of tea in K-Cups.
Coffee shipped in the supermarket channel increased 7.1 percent in the quarter with strong growth from both existing customers and new ones. Growth is being primarily driven by increased demand for the company's Fair Trade Certified and organic offerings.
The consumer direct channel grew 45 percent in dollar sales and 29.6 percent in coffee pounds shipped. The majority of this was related to the sales of Keurig single-cup brewers for the home and the associated K-Cups as well as K-Cup sales to the developing retail channel.
The foodservice channel was the largest channel contributor to the company's coffee pound growth, representing 37 percent of the coffee pound growth of the quarter. The 44.4 percent increase over the prior year is a result of the Nov. 1 rollout to more than 650 McDonald's restaurants in New England and New York where the company is selling two Newman's Own Organics Fair Trade Certified coffee.
In the convenience store channel, coffee pounds shipped increased 8.1 percent, reflecting increased sales relating to inventory replenishment, which varies quarter to quarter.
The company experienced a 69 percent gain in sales of Certified Fair Trade and organic coffees. Companywide K-Cup shipments increased 33 percent over the prior year quarter.
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