Starbucks Corporation (SBUX), Dunkin Brands Group Inc (DNKN), Green Mountain Coffee Roasters Inc. (GMCR): Coffee Roasts, Explosive Growth

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Similarly, Green Mountain has a strong relationship with Dunkin Brands Group Inc (NASDAQ:DNKN), which started selling Dunkin’ Donuts K-Cups in 2011 after noticing widespread customer demand. The distribution deal it signed with Green Mountain is expected to generate significant revenue for the company as it taps into Green Mountain’s existing single-cup infrastructure; moreover, Dunkin’ Donuts K-Cups are only sold in Dunkin’ Donuts stores, providing customers with an added incentive to go to the store and buy other Dunkin Brands Group Inc (NASDAQ:DNKN) products. Considering the strong sales of Dunkin’ Donuts K-Cups, Green Mountain and Dunkin Brands Group Inc (NASDAQ:DNKN) will most likely continue their profitable relationship well into the future.

There is huge opportunity for Green Mountain Coffee Roasters to grow. For 2013, the company expects the Keurig U.S. household base to grow between 25% to 30%, which also results in increased demand for Green Mountain’s coffee packs. Green Mountain has been aggressively expanding its presence in the market through the Vue single-cup custom brewing system and, recently, the Rivo, a single-serve espresso machine. Now, it has plans for a new line of brewing systems, expected to be rolled out in 2014, that are capable of brewing both K-Cup packs and Vue packs.

It’s also worth noting that when Green Mountain’s Keurig machine patent expired in September 2012, many investors wondered about Green Mountain’s ability to continue to lead the market. Although in the long-term Green Mountain may face increased competition from generic single-serve entrants such as Kroger and Safeway, analysts such as KeyBanc’s Akshay S. Jagdale believe that the huge growth opportunities of the single-serve market will largely neutralize any negative effects from increased competitors. The U.S. household penetration for Keurig systems is only 13% and Keurig systems are estimated to be in only 10% of U.S. workplaces, 5% of travel, leisure and hospitality locations, and 1% of food service locations.

There is tremendous potential in the single-serve coffee market, and Green Mountain Coffee Roasters, with its extensive partnerships and aggressive expansion, is in a prime position to profit.

The article Coffee Roasts, Explosive Growth originally appeared on Fool.com and is written by George Liu.

George Liu has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. George 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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