Whole Foods Selling K-Cups in Challenge to Green Mountain

October 11, 2013 Leave a comment

Whole Foods Selling K-Cups in Challenge to Green Mountain

Whole Foods Market Inc. (WFM) started selling organic private-label coffee pods that fit into Green Mountain Coffee Roasters Inc.’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) 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. 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 0.7 percent to $68.39 at 11:52 a.m. in New York. The company gained 67 percent this year through yesterday, while the Standard & Poor’s 500 Index rose 16 percent.

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. 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

Filed under Macro Trends

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