Shares of Mondelez International Inc (NASDAQ:MDLZ) rose slightly after the announcement of Nespresso-compatible espresso capsules and continuing an investment in its Tassimo multi-beverage product. Tassimo is sold in most major retail stores as well as wholesale on the company’s website. There is more to the individual beverage market than selling the best brewing machines, however. Cross-pod contamination from rival companies is emerging as the pod category continues to grow with Keurig, Tassimo, and Nespresso beverages.
Copycat wars
For Mondelez International Inc (NASDAQ:MDLZ), the chance to tap into the $80 billion global coffee industry and the $8 billion single-serve industry is vital to the success of the company’s global coffee growth plan. With both the “Jacobs” and “Carte Noire” brands offering the single-serve packets, the company is poised to make entry into the Nespresso machine to drive its bottom line coffee growth. With revenue of over $35 billion in 2012 and emerging as the no. 2 leader in global coffee market, the future looks bright for this snacking company.
Mondelez International Inc (NASDAQ:MDLZ) has done very well since its spin-off from Kraft Foods. With $8.7 billion in revenue and organic net revenues of 3.8%, this snacking giant has grown substantially in the last year. It has also grown in emerging markets, showing double-digit growth in China, Brazil and India. The company has a presence in 165 countries, with over 110,000 employees worldwide.
Mondelez International Inc (NASDAQ:MDLZ) sees a great opportunity to expand its coffee category holdings while leveraging its huge international presence as a means of expanding production and increasing market share. Currently, Tassimo is one of the company’s powerhouse brands and is one of six brands which account for 50% of the company’s beverage, cheese, and dairy revenue. With the expansion into the Nespresso market, however, the brand can grow even more.
What does this mean for Nestlé?
With the single serve market growing by 14% since 2006, Nescafé and Dolce Gusto lead single serve market with over a 70% market share in Europe. Although Nestle SA Reg Shs. Ser. B Spons (ADR) (NASDAQOTH:NSRGY)‘s sales from Nespresso have slowed, rival companies have started to penetrate the market with outside beverage capsules. Nestle SA Reg Shs. Ser. B Spons (ADR) (NASDAQOTH:NSRGY) owns 30 smart and stylish designer machines with an elegant Grands Crus capsule collection. With a limited selection of 19 flavors, however, Nestlé is inviting competitors to take part in its collection even though it currently leads the market with 19% of the espresso & filter-portioned coffee machine sales.
The embattled K-Cupwar
Although Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is barely making a dent on the worldwide coffee market, it should take note when it comes to beverage infringements. Keurig, the company’s flagship single-serve coffee maker, has been the poster child of patent infringements. With recent courtroom battles over the K-Cup and single-serve beverage brewer containers, it has rapidly developed partnerships with companies for the Keurig brewing system while reapplying for patents associated with the product. Along with the product launch of the Vue, the company hopes to retain ownership of the beverages brewed inside the machines while launching partnership brands to drive machine sales.
Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has continued to grow momentum in the single-serve market with its rapid Keurig expansion. With category growth of 50% from 2009 to 2012 and the Keurig system being one of the top four best-selling coffeemakers by dollar volume on the market, revenue from machines alone surpassed $759.8 million dollars. However, revenue from the company’s K-Cups was the majority of top line revenue with $3.86 billion for the year of 2012. Will this coffee brewer be able to keep up with rapid expansion? Only time will tell as more K-Cups hit the market.
The bottom line
Wise investors should take heed of the single-serve beverage market which is currently at $8 billion and growing. Mondelez International Inc (NASDAQ:MDLZ) leads the market with an already-popular brewing system, and the company plans to develop new pod products along with continued Tassimo expansion. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) plans to partner with other beverage companies to expand its beverage selections, while Nestlé is tapping into the gourmet coffee market with their elite machines. With these three companies paving the way in the single-serve beverage space, there is only room to grow as coffee drinkers drive market innovation.
The article Where to Invest in the Single-Serve Market originally appeared on Fool.com.
Kaitlyn Tokay has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters. Kaitlyn is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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