Green Mountain Coffee on a roll
Published: Monday, December 19, 2005
By Adele Holoch
Correspondent
It all started with a cup of coffee in a Waitsfield cafe.
Robert Stiller ordered the coffee and liked it so much he decided to buy into the business that made it.
From those modest beginnings, Stiller has built Green Mountain Coffee Roasters into a booming business. The Waterbury-based company’s blends are now almost ubiquitous, available not only in grocery stores and restaurants across the nation, but also in 658 McDonald’s restaurants in the Northeast.
The Waterbury company’s partnership with McDonald’s was announced in late October, and McDonald’s began selling Green Mountain Coffee Roasters’ Newman’s Own Organics Blend coffee in restaurants in New England and Albany, N.Y., on Nov. 1. The deal was exciting for Green Mountain Coffee, and not just from a business perspective.
With more than 600 employees and $161.5 million in net sales in its last fiscal year, Green Mountain Coffee has tried to blend success with social conscience through sales of organic Fair Trade Certified coffees.
On its Web site, Green Mountain Coffee explains the Fair Trade certification as helping to ensure that small-scale coffee and sugar producers receive a fair price for their crops, which in turn enables them to support their families and their communities.
Years ago, GMCR struggled to move its organic coffee out of its retail store. Now, the McDonald’s partnership brings organic coffee to the masses.
For the masses
Green Mountain Coffee tried to get its start in the organic coffee business in 1990, and the effort was less than successful.
“Back around 1990, we ordered an organic coffee from Mexico and put it in our retail stores. The quality was OK and our efforts to market it could have been improved,” said Rick Peyser, director of social advocacy and public relations for the company.
In 1995, Peyser traveled to Guatemala and Mexico with a small group of coffee professionals.
“We were not convinced of the benefits of organic coffee,” Peyser said, “but organic coffee he tried on his travels changed his mind, with a taste “as good as anything we were selling at the time.”
Green Mountain Coffee imported its first bulk order of organic coffee from Peru in 1996, and had six organic offerings by 2000. A relationship with Newman’s Own Organics followed in 2002, when Green Mountain Coffee partnered with the organic line of Paul Newman’s company, run by his daughter Nell, to produce blends of organic and Fair Trade Certified coffees.
“We wanted to help coffee farmers maintain both the quality of their coffee and the quality of life in their communities, and the way we could do that was by building volume, purchasing and selling more of this Fair Trade coffee. Most of it was sold in natural food stores, organic cooperatives, and our goal was to bring this coffee mainstream. That was the only way we could be of significant value to the farmers,” Peyser said.
Big boost
That effort got a big boost from the McDonald’s partnership.
“It doesn’t get much more mainstream than McDonald’s,” Peyser said.
Green Mountain Coffee’s efforts to build that relationship date back to 2001, when the coffee company spoke with McDonald’s about developing a branded coffee program. At the time, McDonald’s decided not to go forward. A few years later, Green Mountain Coffee met again with McDonald’s and regional franchisees who were looking to improve their restaurants’ breakfast business.
“We listened closely to what McDonald’s was looking for, which we heard was a specialty coffee, a high-quality coffee, with a point of difference. Something that would enable them to differentiate their coffee from their competitors, and, due to its quality, would help their morning breakfast business,” Peyser said.
Green Mountain Coffee delivered, and McDonald’s is now promoting the coffee with an emphasis on its Fair Trade Certified and organic status.
The success of the partnership owes much to the growing popularity of organic products, as John Lambrechts, general manager and vice president of the McDonald’s Boston Region acknowledged in a press release, calling Newman’s Own Organics Blend “a unique and exceptional coffee to meet the changing tastes and needs of our customers.”
“Selling the Newman’s Own brand provides the regional McDonald’s restaurants a unique and exceptional coffee to meet the changing tastes and needs of our customers,” Lambrechts said.
Added Peyser, “We’re really pleased that the franchisees of McDonald’s in the Northeast have embraced not just the coffee but the concept. It’s going to be a great relationship, a real win-win.”
Profile boost
Green Mountain Coffee is also boosting its profile in other ways.
In November, a Fair Trade Certified organic coffee soda was launched. The soda comes in five flavors and is sold in supermarkets in select Northeast locations, including Shaw’s Supermarkets, Hannaford Brothers, Price Chopper, and Jolley Stores. Called Double-Bean Elixirs, the soda is manufactured by a Nevada corporation called Java Pop.
The company is also betting its line of single-serve, self-contained coffee brewing system called K-Cups, will become a hit with consumers.
The Associated Press reported last week that a survey by the National Coffee Association of USA found that of more than 172 million American adults who consumed coffee, nearly two-thirds were aware of single-serve brewing systems, but only 2 percent reported owning one and 14 percent said they were very or somewhat likely to buy one.
Green Mountain Coffee’s dedication to social responsibility has a financial upside as well.
In a Nov. 30 online article, Kiplinger’s Personal Finance, Katy Marquardt reports: “Green Mountain Coffee Roasters, a small firm based in Waterbury, Vt., may not be the first name to leap to mind when you think of specialty coffee, but it has caught the attention of Matt Patsky and Jack Robinson, managers of the Winslow Green Growth fund.”
The article continues: “Patsky and Robinson look for companies that are environmentally responsible because, among other things, they are far less likely to be fined or sued for fouling the air or water.”
“Green Mountain is among their favorite stocks.”
That stock has climbed to $41 per share, recently, a gain of almost 71 percent over the past year. Green Mountain Coffee, which trades on the Nasdaq exchange, closed Friday at $41.01, up 20 cents. For the fiscal year, which ended Sept. 24, the company reported a net income of $8.9 million, up from $7.8 million a year ago.
“We look very carefully at our customers, we try to be a little ahead of the curve, looking at trends within the coffee industry, and we try to do our best to match those opportunities with our customers,” Peyser said. “And we try to do that in a way that is responsible, both socially and environmentally.”
Company profile COMPANY: Green Mountain Coffee Roasters
HEADQUARTERS: Waterbury
FOUNDED: 1981
FOUNDER: Robert Stiller
SALES: $161.5 million in fiscal year 2005, including a 51 percent growth in shipments of Newman’s Own Organics Fair Trade and GMCR Fair Trade and Certified Organic lines
EMPLOYEES: Around 625
CONTACT: www.GreenMountainCoffee.com or (888) 879-4627.