Market Overview

Green Mountain Names New CEO

Green Mountain Names New CEO
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Green Mountain Coffee Roasters (Nasdaq: GMCR) has named Brian Kelley, a top executive at Coca-Cola (NYSE: KO) to be its new CEO and president starting on December 3. Kelley had just been named to be the president of Coca-Cola Refreshments, a position he would have started in January.

Kelley had been with Coca-Cola since 2007. “In his prior role as President of North America Business Integration, he led the total integration of the acquisition of the North American assets of Coca-Cola Enterprises, combining Coca-Cola North America and Coca-Cola Enterprises' North American operations into a new company, Coca-Cola Refreshments,” a GMCR statement said.

Kelley is going to have his work cut out for him. Green Mountain Coffee Roasters is known for its Keurig “K-cup” single serving coffee brewers. The patent on the K-cup technology expired in September and this has attracted several high-profile competitors into the K-cup compatible single serving brewer market.

Chief among these is Starbucks (Nasdaq: SBUX), which launched its new Verismo K-cup single serving brewer, which sells for $199. One of the key features of the Verismo is that it will brew both coffee and espresso drinks. Existing Keurig brewers will only make coffee and are more expensive than the Starbucks Verismo. Nestle (OTC: NSRGY) is also competing in the brewer market with its Nespresso coffee and espresso brewer.

Green Mountain is gearing up to counter the competition in the dual brewer market with its Rivo coffee/espresso brewing machine. The Rivo is not yet available for sale but product details can be found here. The Rivo will only be compatible with Lavazza espresso packs and will use fresh milk or even soy milk to make lattes and other espresso drinks. The Starbucks and Nestle brewers use either powdered milk or milk pods to make lattes.

Other players have entered the K-cup pod market, targeting a wider customer base. Kraft Foods (NASDAQ: KRFT) is selling Maxwell House and Gevalia brand K-cup pods for Keurig brewers without paying any license fees to Green Mountain, Reuters reported.

“Following news of similar launches by private label brands including Kroger Co (NYSE: KR), Safeway Inc (NYSE: SWY) and Supervalu Inc (NYSE: SVU), the move by Kraft adds more weight to the argument put forth last year by Greenlight Capital's David Einhorn, who questioned the sustainability of Green Mountain's dominance in the single-serve market,” Reuters continued. “Einhorn publicly disclosed a short position in the company a year ago.”

Green Mountain's share price has reacted positively to the news of the new CEO, rising nearly seven percent to 29.20 at mid-morning. Still that is a long way from the $113 price the share boasted back in September 2011. The shares have good support at the 50-day simple moving average (25.33) but faces strong resistance at the declining 200-day simple moving average (33.16).

It seems likely that Green Mountain will trade in a range bounded by these moving averages until the new CEO gets his feet under his desk for a few months and the market has a chance to see what he can do.

Posted-In: Brian KelleyNews Management Best of Benzinga

 

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