Coffee prices are expected to soar around the world due to natural and manmade factors.
Changes in the coffee market have reduced coffee supplies and are driving some coffee-bearing regions to stockpile coffee beans. This is big news if you are a coffee drinker. Prices are expected to increase around the world. It is a lesson of basic economics - the law of supply and demand - and there is nothing that can be done about it this year. Unfortunately, everyone from coffee farmers through roasters and retailers, right down to you and your coffee mug, is feeling the effects a poor growing season can have on an agricultural product that is consumed internationally but only grown in a few select regions.
Weather is as unreliable as a commodities market, and these days, it seems just as unstable. A bad season in South America led to weaker than usual harvests and a resultant decline in this year’s world harvest of Arabica coffee beans. Like a run on the banks, this has led to panicked stockpiling in other regions of the world. Beyond that, investors in coffee commodities too took a lemming-like run on robusta coffee beans, driving up prices of the lesser quality coffee bean as well. This combination of natural and man-made factors in the coffee market this year has formed the perfect storm to drive up all coffee prices.
The result is that coffee prices have reached an historic high. All of this has happened at a time when domestic stockpiles of coffee beans are low. Not a single domestic manufacturer of whole bean, ground or single serving coffee is escaping the increase in costs that this leads to. The result is as much as a twenty percent increase in coffee prices. Of course, this cost increase is passed on to the retailers and unfortunately also affects the pocket books of coffee drinkers.
We are expecting even the best K-Cup coffee prices to increase 10 - 15 percent and other coffee products to see similar price jumps in the first weeks of October. That makes now the time to stock up in order to beat the price increase.
Coffee is a market-based commodity; as demand stays steady and the supply declines, worldwide prices increase. We can all hope for a better harvest next year on all the coffee farms the world over.
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WATERBURY, Vt. (September 7, 2010) – Green Mountain Coffee Roasters, Inc. (GMCR) (NASDAQ: GMCR), announced today a price increase on all K-Cup® portion packs for its Keurig® Single Cup brewing system sold in North America. The increase will occur across all sales channels and will be effective beginning October 11, 2010. Consumers could expect to see a purchase price increase of approximately 10 to 15 percent over the next several months as a result.
Tuesday, September 21, 2010
Wednesday, June 2, 2010
Diedrich Coffee Acquisition By Green Mountain Coffee Completed
The Associated Press May 12, 2010
Businessweek.com
WATERBURY, Vt.
Green Mountain Coffee Roasters Inc. has completed its $300 million acquisition of Diedrich Coffee Inc., one of four roasters licensed to produce K-Cups for the top-selling single-serve Keurig brewing system.
The K-Cup brand is owned by Green Mountain, which is based in Waterbury.
Green Mountain said Tuesday it paid $35 per share in cash for each share of common stock. As of midnight Monday, nearly 5.5 million shares had been tendered -- roughly 95 percent of the company's outstanding shares.
Diedrich is now a wholly owned subsidiary of Green Mountain and will be part of its specialty coffee division.
Shares of Green Mountain, based in Waterbury, Vt., closed at $76.51 on Tuesday. Diedrich Coffee shares will no longer be traded on the NASDAQ Stock Exchange.
Businessweek.com
WATERBURY, Vt.
Green Mountain Coffee Roasters Inc. has completed its $300 million acquisition of Diedrich Coffee Inc., one of four roasters licensed to produce K-Cups for the top-selling single-serve Keurig brewing system.
The K-Cup brand is owned by Green Mountain, which is based in Waterbury.
Green Mountain said Tuesday it paid $35 per share in cash for each share of common stock. As of midnight Monday, nearly 5.5 million shares had been tendered -- roughly 95 percent of the company's outstanding shares.
Diedrich is now a wholly owned subsidiary of Green Mountain and will be part of its specialty coffee division.
Shares of Green Mountain, based in Waterbury, Vt., closed at $76.51 on Tuesday. Diedrich Coffee shares will no longer be traded on the NASDAQ Stock Exchange.
Green Mountain Coffee Acquires Diedrich Coffee
Green Mountain Coffee Roasters acquired Diedrich Coffee Inc. in March after several months investigation by the Federal Trade Commission (FTC). The federal regulators scrutinized the impact that the sale of Diedrich Coffee would have on the single serve coffee for Keurig coffee makers.
Green Mountain purchased Keurig Inc in 2006 and has been working to consolidate production and Keurig K-Cup sales ever since. Tully's Coffee Corp. wholesale division was bought early in 2009, followed by Timothy's Coffees of the World Inc. in November of 2009. Shortly thereafter, in December, the deal for Diedrich Coffee Inc was agreed upon. Green Mountain successfully shut out the attempts of Peets Coffee to purchase Diedrich.
The size of the Diedrich purchase triggered an automatic federal review under the Hart-Scott Antitrust Improvement Act of 1976.
The Diedrich Coffee buyout comprised the largest acquisition of a licensee by Green Mountain, whose earlier transactions had apparently not been large enough to trigger a Hart-Scott-Rodino filing. The review by the FTC was quite extensive, spurred on by political pressure by some of Green Mountain competitors.
Keurig coffee makers and K-Cups are successfully changing how people are brewing coffee. There have been single cup brewers before the Keurig but none of them have drastically changed the coffee market like the Keurig brewer has. Many in the coffee industry see the growth of the K-Cup market as a game changer for coffee roasters that have captured consumers with gourmet coffee beans for more than two decades.
The parents of baby boomer drank percolated their coffee. The disco era brought gourmet coffee beans that we ground and dripped to make our pot of coffee. Now, in the 21st century, we brew one cup of coffee at a time for the freshest flavor without throwing out the rest of the pot.
The Diedrich's K-Cup market actually kept their business alive when they attempted to challenge the Starbucks coffee shop idea with their own coffee houses. In 2006, Diedrich sold 40 of their coffee houses to Starbucks Corp. In 2009 sold the remaining Gloria Jeans's Gourmet Coffee & Teas in the U.S. to Praise International North America, an affiliate of the Australian group that bought the internationaal Gloria Jean's a few years before.
Diedrich's was originally licensed in 2000 by Keurig Inc. to produce the K-Cups prior to Keurig's purchase by Green Mountain. Diedrich K-Cup market didn't produce the profitability they realized 6 years later, when K-Cups became a significant part of their business.
Green Mountain's business saavy put Keurig coffee makers in retail markets like Wal-Mart, Macy's, Bed Bath & Beyond and Target. Diedrich K-Cup sales multiplied and their stock soared in 2009, ending up about 10,000%.
In late fall of 2009, Peet's Coffee & Tea Inc. first offered $213 million in cash and stock for Diedrich. Thus began the bidding war that ended with Green Mountain's acquisition.
Peet's coffee aggressively sought to purchase Diedrich because of the success of the K-Cup and the change in the coffee industry. They were looking for an opportunity to enter the single cup brewing market with the proven successful K-Cups. When Peet's divulged it's bid to the public in November, Diedrich was able to seek bids from other suitors; enter Green Mountain.
The month long bidding war culminated in the winning bid by Green Mountain and the several month investigation by the FTC. Recently, Green Mountain's acquistion of Diedrich Coffee Inc. was completed with the blessing of the Federal Trade Commission.
Green Mountain purchased Keurig Inc in 2006 and has been working to consolidate production and Keurig K-Cup sales ever since. Tully's Coffee Corp. wholesale division was bought early in 2009, followed by Timothy's Coffees of the World Inc. in November of 2009. Shortly thereafter, in December, the deal for Diedrich Coffee Inc was agreed upon. Green Mountain successfully shut out the attempts of Peets Coffee to purchase Diedrich.
The size of the Diedrich purchase triggered an automatic federal review under the Hart-Scott Antitrust Improvement Act of 1976.
The Diedrich Coffee buyout comprised the largest acquisition of a licensee by Green Mountain, whose earlier transactions had apparently not been large enough to trigger a Hart-Scott-Rodino filing. The review by the FTC was quite extensive, spurred on by political pressure by some of Green Mountain competitors.
Keurig coffee makers and K-Cups are successfully changing how people are brewing coffee. There have been single cup brewers before the Keurig but none of them have drastically changed the coffee market like the Keurig brewer has. Many in the coffee industry see the growth of the K-Cup market as a game changer for coffee roasters that have captured consumers with gourmet coffee beans for more than two decades.
The parents of baby boomer drank percolated their coffee. The disco era brought gourmet coffee beans that we ground and dripped to make our pot of coffee. Now, in the 21st century, we brew one cup of coffee at a time for the freshest flavor without throwing out the rest of the pot.
The Diedrich's K-Cup market actually kept their business alive when they attempted to challenge the Starbucks coffee shop idea with their own coffee houses. In 2006, Diedrich sold 40 of their coffee houses to Starbucks Corp. In 2009 sold the remaining Gloria Jeans's Gourmet Coffee & Teas in the U.S. to Praise International North America, an affiliate of the Australian group that bought the internationaal Gloria Jean's a few years before.
Diedrich's was originally licensed in 2000 by Keurig Inc. to produce the K-Cups prior to Keurig's purchase by Green Mountain. Diedrich K-Cup market didn't produce the profitability they realized 6 years later, when K-Cups became a significant part of their business.
Green Mountain's business saavy put Keurig coffee makers in retail markets like Wal-Mart, Macy's, Bed Bath & Beyond and Target. Diedrich K-Cup sales multiplied and their stock soared in 2009, ending up about 10,000%.
In late fall of 2009, Peet's Coffee & Tea Inc. first offered $213 million in cash and stock for Diedrich. Thus began the bidding war that ended with Green Mountain's acquisition.
Peet's coffee aggressively sought to purchase Diedrich because of the success of the K-Cup and the change in the coffee industry. They were looking for an opportunity to enter the single cup brewing market with the proven successful K-Cups. When Peet's divulged it's bid to the public in November, Diedrich was able to seek bids from other suitors; enter Green Mountain.
The month long bidding war culminated in the winning bid by Green Mountain and the several month investigation by the FTC. Recently, Green Mountain's acquistion of Diedrich Coffee Inc. was completed with the blessing of the Federal Trade Commission.
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