COMMENT: Green Mountain’s ethical earnings
Green Mountain Coffee has reported a hike in its Q3 earnings.
By pursuing increased in-home single-cup coffee sales and providing products for the growing number of ethically-driven consumers, Green Mountain has achieved a 20.5% increase in its Q3 sales. The growth was underscored by a shrewd understanding of emerging consumer demands for convenience and social responsibility, an understanding which should help steer the company toward further success.
Green Mountain Coffee Roasters reported a 20.5% increase in quarterly sales, to US$37.8m.
The company's CEO, Robert Stiller, cited consumer enthusiasm for the Keurig single-cup brewer servings and increasing demand for the Fair Trade Certified and organic offerings as factors contributing to the growth. The company also said it expects sales to grow by up to 21% for fiscal 2005 and by a maximum of 25% for fiscal 2006.
Single-cup servings of coffee have been driving sales for many coffee companies in recent years, due in part to the propagation of single-serve machines from the workplace into consumer homes. Green Mountain's licensing partnership with Keurig, the brewing machine manufacturer, has so far yielded great rewards. As the distribution of home brewing machines looks set to increase as consumers opt for upscale products and convenience, Green Mountain is well positioned to introduce an ever-broadening range of single-serve products.
The demand for Green Mountain's fair trade coffee, meanwhile, reflects an increasing uptake of cause-related products throughout the CPG industries. A recent Datamonitor report found that the food and drink were the industries in which consumers were most ethically aware and that US consumers were the most likely to participate in ethical activities. For Green Mountain, the shift in consumer attention to fair trade products has helped drive a 43.5% gain in sales of its certified fair trade and organic coffees in Q3, including sales of the company's co-branded Newman's Own Organic coffees.
The extent to which ethical consumerism influences food and drinks markets is, in part, itself driven by consumers' deepening understanding of the generally complex and interlinked ethical issues behind CPG production. It is clear from the latest raft of cause-related CPG offerings, such as Starbucks' launch of the Ethos bottled water brand in its US stores, that this is the case. Green Mountain, by focusing on new product trends and social responsibility and by tailoring its business relationships accordingly, seems well positioned to maintain growth through 2006.
Sectors: Soft drinks
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