Marketing Plan Green Mountain Coffee Roasters, Inc. I. Executive Summary Green Mountain Coffee Roasters currently has a revenue growth rate of 35.5% over the last 5 years. This company is growing right along side the fastest growing portion of the of the coffee industry, the high-end specialty coffee market. Green Mountain is a product leader in this category, they emphasize quality and enjoyment of their product. Green Mountain’s target market is no question wholesaler’s.
Green Mountain has over 5,000 wholesale accounts that currently account for 94% of their revenue. In this marketing plan I thoroughly go through who their wholesale customers are, the relationships they have with them, and how they plan to use them in their overall strategy to obtain more customers in different market segments. Also in this report, I discuss the competitiveness of the industry Green Mountain is in, as well as the opportunities, threats and other outside influences that can have a positive or negative effect on the company. In general this report is an overview of the company that is Green Mountain Coffee Roasters, their industry, target markets, environmental influence’s, competition, and most importantly their strategy, along with my critique. II. Description of Company Green Mountain Coffee Roasters began in 1981 as a small caf in rural Vermont.
Today the company boasts a 90,000 square feet, state-of-the-art distribution & roasting facility in Waterbury, Vermont, where the company is based. Green Mountain Coffee Roasters has a strong regional presence in the Northeast and is gaining Market share in other parts of the country. It has an extensive wholesale operation as well as a direct mail and Internet businesses. Green Mountain Coffee, Inc. is a leader in the specialty coffee industry. The company roasts 60 varieties of high quality Arabica coffees including single-origin, estate, certified organic proprietary blends and flavored coffee’s that it sells all under the Green Mountain Coffee Roasters name brand.
The majority of their revenue comes from their aforementioned wholesale operation, which services restaurant, supermarket, specialty food store, convenience store, food service, hotel room hospitality, university, airline, train and coffee office service customers. The company went public in 1993 and is listed on the NASDAQ National Market under the symbol GMCR; for the Fiscal year ended September 25th, 1999, net sales increased 16.2% to a record $64,881,000. III. Description of the Industry Changes The coffee industry has shifted towards specialty coffees such as Green Mountain’s in the recent years, and The Company competes against all sellers of specialty coffee. These specialty coffees are higher priced then normal coffees; the increased demand for them has been driven by consumer education, a wider availability of high quality coffee such as Green Mountain’s, and an emergence of up scale coffee shops throughout the country. Competition According to the National Coffee Association of USA, Inc. four out of five American consumers consider themselves coffee drinkers; on average an estimated 400 million cups of coffee are consumed in the US each day.
Next to oil, coffee is the highest traded commodity in the world. Specialty coffees are becoming increasingly popular in the US, and the fastest growing segment of the coffee market. Green Mountain Coffee has become an established and premier brand in the specialty coffee market. This market is highly competitive, and because of the high growth of this segment, large companies have entered the market. Proctor & Gamble distributes Millstone into supermarkets, which is a direct substitute for Green Mountain Coffee; Starbucks recently signed a distribution agreement with Phillip Morris/ Kraft foods that will enable Starbucks to place its Coffee in supermarkets as well. Starbucks has also been growing in its wholesale operations, and hopes to leverage its brand name that is continually growing in equity do its popular neighborhood coffee houses and trendy style.
In the office coffee, convenience store and service arena, General Food’s, Proctor & Gamble, and Sara Lee are direct competitors. In the direct sales area of the market, which accounted for 6% of Green Mountain’s revenue in 1998, their major competitor is a division of General Foods, Gevalia. As you can see there are a lot of large multinational corporations in the market that have resources available to them that Green Mountain does not have. Starbucks is the only other major independent producer of high-end coffees. As this new market expands and smaller companies strive to build brand awareness and larger companies attempt to earn larger market shares and build brand equity, competition will only intensify. Environmental Factors influencing Green Mountain Coffee Inc.
What we will look at in this section is the major Social and Economic factors that are influencing Green Mountain Coffee and whether or not these factors can be looked at as opportunity or a threat to Green Mountain. Social ? Major social trends include a movement toward more natural and healthy products, as well as lifestyles. This trend can only help Green Mountain. With its Organic line of five different coffee flavors having been introduced on Earth Day, 1998 and available along side all its normal line, Green Mountain is aggressively pursuing this new market. ? Another social trend is that of America becoming more concerned with the environment.
Green Mountain works closely with Conservation International, and the Rainforest Alliance. In 1998 the company was invited to present a Environmental case study at the Future 500 annual conference on its biodegradable coffee bag that it developed in partnership with 3M corporation. The Company has also sponsored a Yale research project to find more environmental and labor healthy ways of producing Coffee. The study perpetuates Green Mountains continuing efforts to develop long-term relationships with its coffee-producing partners. It also continues Green Mountains overall support for positive environmental and social initiatives, such as their Stewardship line of coffee that come only from farms that exhibit extraordinary care of their land and their employees.
The environment is an issue that Green Mountain takes very seriously and its many different environmental projects can only strengthen the company in the mind of the consumer. Economic ? The extraordinary economic boom that is currently happening in America has caused a substantial increase in per capita income and the standard of living. Green Mountain Coffee is a high-end product that is pricier than normal coffee’s on the market, The overall economic prosperity of the country gives consumers greater disposable income and a higher propensity to buy higher priced consumer goods such as Green Mountains. ? The extraordinary growth of e-commerce has in most cases forced companies to either develop an effective e-commerce solution. This new use of technology can be looked upon certainly as an opportunity or a threat depending on the success of Green Mountain in this area. They recently opened a web site that offers a variety of information on the company and secure online purchasing of Green Mountains products. Initial reactions have been positive, as they have been proven to be an effective channel for the obtainment of new direct-mail customers. This new area of commerce is looking more like an effective medium to sell and provide information to consumers than a possible threat.
Other Influences ? Green mountain uses a combination of outside brokers and And direct relationships with estates for its supply of green coffees, with outside brokers providing the majority. The price of coffee is subject to high volatility. The company generally passes coffee price increases or decreases on to the customer, which means if the price of green the green coffee bean increases, or world supply of the green coffee bean decreases, the price is raised and sales could diminish. Another outside influence that could have an adverse affect on Green Mountain’s operations is the acquisition of Mobil by Exxon Corporation. Mobil, a wholesale account, accounted for 14,4% of sales for fiscal 1998. IV. Description of the Customer Wholesale The market segment that Green Mountain focuses on is the wholesale market.
In 1998, ’97, and ’96 this market accounted for 94%, 93%, and 91%, respectively, of total sales. Green Mountain’s wholesale operation services a wide variety of establishments, primarily in the northeastern United States. Green Mountain’s wholesale customers resell the coffee in whole bean or ground form for home consumption and/or brew and sell coffee beverages at their place of business. Notable wholesale customer accounts include: Supermarkets Restaurants Hannaford Brothers – 120 stores Aureole Restaurant, NYC Shaw’s -100 stores The Harvard Club, NYC Stop & Shop – 150 stores New England Culinary Institute Roche Brothers – 13 stores Culinary Institute of America Office Coffee Services Convenience Stores Perrier’s Poland Springs Mobil Convenience Stores Vermont Pure Springs Orlosoki Quik Marts Bunn Coffee Service Other Food Services Other Retail Amtrak – northeast corridor L.L. Bean Delta Express and Delta Shuttle American Skiing Company Stowe Mountain Resort Smuggler’s Notch Resort The Distribution of Wholesale Coffee Pounds Sold During Fiscal 1998 by Wholesale Customer Category Through the Wholesale operation, Green Mountain has started an international sales effort, principally through it’s various distributors, and targeting nations where there exists either a tradition of coffee consumption or a recent trend indicating a market for specialty coffee like Green M …