Research Question: With its K-Cup patent set to expire, will Green Mountain Coffee experience a significant decrease in sales as competition heats up?
Companies: Green Mountain Coffee Roasters (GMCR)
Blueshift’s initial research on GMCR revealed the long-anticipated entry of lower-priced off-label K-Cup packets in September, with the consequences for GMCR sales undetermined.
- In September 2012, the patents protecting GMCR’s K-Cup, (patent 5,325,765 and patent 5,840,189), are set to expire and will fall into the public domain, allowing competitors to produce K-Cups. Supermarket operators Kroger and Safeway recently announced that they will make their own lower-priced store-brand coffee pods. Additionally, Canadian restaurant Tim Hortons recently decided to exclusively offer its premium brand coffee for Kraft’s Tassimo single-serve brewer at over 500 U.S. locations and online.
- Blueshift primary interviews with GMCR commercial suppliers from our April report revealed that the expiration of K-Cup patents is a threat to Green Mountain, as it invites more and lower-priced competition to K-Cups. Additionally, one source said at least five roasters have purchased K-Cup assembly machines in anticipation of the patent expiration.
- GMCR’s market leading position, brand recognition, abundance of choices in flavors, and various price points for its brewer systems, including the new Vue released earlier this year, are all defenses from potential competitors once its K-Cup patent expires. Additionally, GMCR will increase its offerings of Starbucks and Folgers brands to its Vue platform later this year.
To quantify the impact of GMCR’s K-Cup patent expiration, Blueshift will gather data and issue a market research report from sources in the following areas: Online coffee distributors, commercial suppliers, industry specialists, K-Cup competitors, retail stores, and customers.