Increased Competition
Whole Foods, Safeway, and Kroger are a few of the
companies to have issued their own private-label coffee
capsules and together have taken approximately 8% of
the single-serving coffee market.9 The number remains
relatively low and GMCR has not seen a significant drop
in its revenues/profits, but it has only been a year and the
private labels need a little more time to establish their
footprint. Over the next 1.5 – 2 years the percentage of
market share will grow closer to 17 – 19, and investors
will have a better grasp of GMCR’s future and the
competitive landscape of coffee sales.
Single-serve K-cup packs make up almost 80% of GMCR’s
total sales, so any significant obstacle poses a threat and
the company must work to maintain growth of K-cups at
levels at or above 15%. Increased competition has
increased the access at a cheaper price. Whole Foods did
not follow Starbucks in making a partnership with GMCR,
it decided to sell its own unlicensed products. Others
followed suit, increasing the threat, but GMCR has done a
respectable job in maintaining partnerships with
Starbucks and Dunkin Donuts. The latter companies have
not jumped ship and continue to pay licensing fees. It has
become imperative for GMCR to not only keep these
deals, but keep a successful growing business in order to
one day reel in Whole Foods, etc. A partnership between
GMCR and Whole Foods (organic sector) could provide
some really beneficial options.
Consumption Growth
The single-cup coffee market obtained a CAGR of 75%
from 2007-2012. Sales in US are expected to continue its
climb to over $5 billion by 2016. Approximate 83% of US
adult population drinks coffee (up 5% from 2012), and
single-cup consumption has been a leading driving force.
Roughly 54% of the same population drink coffee on a
daily basis. Single-cup consumption has risen almost 10%
in the last two years (4%-13%).4 A near certainty of the