Green Mountain Coffee Roasters Case

Abstract

Green Mountain Coffee Roasters is a leading coffee distributor in North America. Through many acquisitions, GMCR has placed itself as the leader in the coffee industry for its exceptional coffee, as well as its k-cup packages. By acquiring Tully’s coffee, Timothy’s coffee, Newman's Own® Organics, Caribou Coffee K-Cups, And Keurig, GMCR has broadened and increased its revenue income, but their Free Cash Flow has decreased too. Free Cash Flow is the money a company is able to generate and use towards it business and expansion. Without sufficient Free Cash, a company does not have a solid business model for equities to invest in.

Thus, the research question of this essay is

“Does Green Mountain Coffee Roasters have a Sustainable Business Model and the Financial Strength to Qualify as a Suitable Equity Investment?”

Both qualitative and quantitative approaches were used in order to reach a valid conclusion. These include primary research through a survey analysis with the CEO’s of Alpine Valley Coffee and Filter Fresh Coffee, distributors of GMCR’s K-cup packages and Keurig brewing systems, as well as the customer satisfactory for those systems and packages. GMCR’s diffusion into North American stores and their popularity will be analyzed and shown in a spreadsheet. Another spreadsheet was created in order to calculate and analyze the Green Mountain Coffee Roasters Free Cash Flow, as well as their quarterly and yearly Revenue. Other spreadsheets such as their Business Model, Balance Sheet, and Income Statement were analyzed in order to understand their company’s growth. Other approaches such as PEST, analyzing and discussing some of their, and analyzing spreadsheets showing their free cash flow were used to analyze their distribution in North America and to get an idea of how much revenue they should be generating, as well as how much Free Cash they should have.

Many view GMCR as a corrupt company that has a high amount of profitable revenue, but low Free Cash Flow that prohibits them to expand.

Word Count: 297

Introduction

Green Mountain Coffee Roasters (GMCR) was established in 1981 in the town of Waistsfield, Vermont. GMCR is now known as one of the nation’s “leading specialty coffee companies”. As coffee and cocoa beans have grown in commodity and price, so has the coffee industry, specifically Green Mountain Coffee Roasters. Currently located in Waterbury, Vermont, GMCR is a leader in the coffee industry for its great tasting coffees, novel brewing technology and diligent business practices. Green Mountain currently