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Ticker: GMCRClosing Price: $36.86
Adam BernthalJerry Hendrix Josh DeWittMatt Allemang
Company Background
o Founded in 1981
o Bought Keurig in 2006
o Leader in specialty coffee and single-cup brewing technology
o Licenses its patented Keurig Machine technology to competitors such as Mr. Coffee, Cuisinart, and Breville
Product Lineo Keurig-Single cup coffee makers– wide brew variety
o K-Cups- Owns several brands; multiple partnerships
o Rivo- New product line specializing in Espresso Based Beverages (EBBs)
Thesis
o New Product Lineo Expansion o Excess Devaluationo P/E Expansion
Recommendation: Buy
New Product Lineo Keurig Rivo
o Introduced: November 2012
o Release: Spring 2013
o Suggested Retail Price: $229
o 4 blends: Classico, Intenso, Decaf, and Delicato
o Produces over 10 specialty drinks
New Product Line
o The Rivo is the result of a partnership between Keurig and Lavazza
o Lavazza has been producing coffee since 1895
o Leading coffee brand in Italy and Europe
o 20 years of Experience in Single-Serve Expresso
Rivo Competitors
Nestle Nespresso Starbucks VerismoPrice: $299 Price: $199
Expansion
International: -"The Geoffrion Offer"
o GMCR has hired Gerard Geoffrion to oversee international development
o Previously the President ofGMCR's Canadian Unit
United States: -2 New Plants
o Vermont & Virginia
European Recovery
Macroeconomic Trends
Macroeconomic Trends
Macroeconomic Trends
Excess Devaluationo Missed Earnings in 2011o Expectations of high growth were
shatteredo P/E of 11.53; low compared to industry
average of 21.6
P/E Expansion
P/E Expansion
Industry Trends
o Over half of people 25-39 drink one EBB per week
o EBB consumption opposite that of traditional coffee consumption
Valuation
Discounted Cashflow Analysis
Questions?
Appendix: Revenue by Segment
