The expansion of a 10-year distribution agreement with The Coca-Cola Company (KO) helped Keurig Green Mountain Inc. (GMCR) hit a new 52-week high of $137.57 on Sep 18, 2014.
The Keurig owner and specialty coffee maker also launched the much-hyped Keurig 2.0 brewing machine last month in Canada.
Growth Drivers
Earlier this month, Keurig Green and beverage giant Coca-Cola expanded their 10-year global partnership to include Coca-Cola’s branded Honest Tea to be available in K-Cup format for use on Keurig hot brewers in the U.S. Two flavors of Honest Tea — Just Green and Just Black iced teas are available in K-Cups from Sep 4 on Keurig’s retail site. (Read: Coca Cola (KO) Launches Honest Tea for Keurig Brewers)
The Honest Tea deal comes almost seven months after Coca-Cola announced the global partnership deal (signed in Feb 2014) with Keurig Green Mountain under which the latter will exclusively make Coca-Cola branded pods for its upcoming Keurig Cold at-home beverage system that will make cold beverages.
In order to remain competitive, especially after its K-Cup patents expired in Sep 2012, Green Mountain has formed several strategic agreements with coffee and beverage companies like Kraft Foods Group, Inc., Starbucks Corporation (SBUX), Unilever plc (UL), Eight O’Clock and Dunkin’ Donuts to offer the signature hot drinks of these companies in its K-cups and Vue packs. (Read: Keurig Hits 52-Week High on Kraft Agreement)
The latest deal with Coca-Cola adds another big name to its list of partners. Investors are encouraged by these initiatives which further Keurig Green Mountain’s goal of sustaining its dominance in the single-serve brewing market even after the expiry of its K-Cup patents.
Moreover, in order to counter competition in the single-serve brewing category, Keurig Green Mountain’s Keurig 2.0 brewing machine with an interactive readability technology that will work only with licensed pods debuted in Canada last month.
Keurig Green Mountain’s (carries a Zacks Rank #3 (Hold)) shares have been on the rise this year, backed by several strategic initiatives. The strong business momentum of the company helped it to yield a solid year-to-date return of 84.22%.
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