Bloomberg News

Whole Foods Sells Coffee Pods in Green Mountain Challenge (1)

October 10, 2013

Whole Foods Market Inc. (WFM:US) started selling organic private-label coffee pods that fit into Green Mountain Coffee Roasters Inc. (GMCR:US)’s Keurig machines, providing more competition for the single-serve coffee company’s K-Cups.

A 12-pack of 365 Everyday Value brand K-Cups is $8.99 at U.S. Whole Foods stores, and there are five varieties, Emily Wright, a spokeswoman for the Austin, Texas-based company, said in an e-mail. Whole Foods, the largest natural-goods grocer in the U.S., has no relationship with Green Mountain, she said. A 24-pack of Green Mountain brand French Roast K-Cups sells for $16.49 on its website.

Competition for Green Mountain’s K-Cups has been increasing as grocers including Safeway Inc. (SWY:US) and Kroger Co. introduce private-label brands of single-serve pods to be used in the company’s Keurig brewers. Yesterday, shares of the Waterbury, Vermont-based coffee company slid the most in 10 months after William Chappell, an analyst at SunTrust Banks Inc. (STI:US) in Atlanta, said in a note that Green Mountain’s owned K-Cup sales “decelerated meaningfully” in September.

Sales growth of Green Mountain-owned K-Cup brands slowed to 5.1 percent in the four-week period ended Sept. 28, compared with 13 percent growth in August, Chappell said, citing Nielsen data. The trend is “concerning,” he said.

Green Mountain shares fell 2.5 percent to $67.16 at the close in New York. The company has gained (GMCR:US) 62 percent this year, while the Standard & Poor’s 500 Index has increased 19 percent. Whole Foods advanced 2.4 percent to $59.81 today.

Green Mountain has introduced higher-end coffee makers that brew milk-based drinks such as the Vue and Rivo to attract customers and boost sales (GMCR:US). The company also is working on a cold beverage system to make carbonated and energy drinks, teas and juice, Chief Executive Officer Brian Kelley said at an investor conference in September.

Whole Foods started selling the single-serve cups last month.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • WFM
    (Whole Foods Market Inc)
    • $36.85 USD
    • 0.00
    • 0.0%
  • GMCR
    (Keurig Green Mountain Inc)
    • $121.04 USD
    • -0.84
    • -0.69%
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