Read Green Mountain Coffee Business Model how much is Green Mountain Coffee what is the price of a cup of Green Mountain Coffee

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If you only know Starbucks before, then this article may benefit you double: open your eyes and learn the business model. The growth history of Green Mountain Coffee can be simply summarized as "selling habits in the early stage and selling standards in the later period". Its business model is not too sophisticated or even original, but the essence is that it can quickly maximize the range of income with the help of channels and the status of "standards".

Can there be a different business model from Starbucks when selling coffee? Yes, Green Mountain Coffee! According to the layman, the name of Green Mountain Coffee is not comparable to that of Starbucks, but in fact, the company's share price soared nine-fold between 2006 and 2010, far surpassing Starbucks! It sells a coffee machine and "coffee K cup", which can instantly brew coffee with a great taste, but the price is 1/10 of that of Starbucks. It doesn't make money selling coffee machines, but it can sell 1 billion K cups a year! What's even cooler is that it allows other beverage manufacturers to produce K-cups, so that not only customers have more choices, but they can also get their own benefits.

The company, called Green Mountain Coffee roasting Company (Green Mountain Coffee Roasters), produces the Krieger Coffee Machine and the accompanying K-Cup Coffee, which has been the biggest driver of its continuous development in the past two years.

"Why make a pot of coffee at a time? I only have one drink at a time. " This is the family get-rich motto of Krieger founders Peter Zhuogan and John Slivan, an idea that prompted them to invent the Krieger K-cup package that makes only one cup of coffee at a time. In order to match the packaging form of K-cup, Krieger has developed a special single-cup coffee machine. Put the K cup in the coffee maker, and a cup of fragrant coffee will appear in front of you in a minute-no need to grind the beans, no weighing, no cleaning, no residue at the bottom, just one cup at a time, and never weigh whether there is too much material! Only one cup at a time, compared with the traditional coffee maker is more convenient, coffee flavor is also more intense.

But this kind of coffee machine can only be used with the "K cup" patented by Green Mountain. The so-called "K cup" is a container that looks like a paper cup with a smaller paper cup-shaped infiltration device that can only penetrate liquid. It contains coffee or tea and is sealed with an aluminum foil cover to ensure that the aroma of the coffee will not be emitted.

K cups in 24 cups usually sell for $12, equivalent to $0.50 each. This robbed not only customers of traditional coffee machines, but also business from Starbucks. More and more Americans, in the economic crisis, gave up the coffee shop 5 dollars a cup of coffee, opting for 0.5 dollars a cup of "K cup."

"K cup" can only be used on this kind of coffee machine. Coffee machines are all outsourced to Chinese suppliers and sold at a reasonable price.

Often more than $100-it is said to be sold at cost and does not make any money at all. And the real money is the K Cup. In 2008, Green Mountain sold 980000 coffee machines, but do you know how many K cups sold? 1 billion! Today, homes and offices in North America consume more than 3 million K cups a day. This "razor / razor blade business model" accounts for about 3/4 of Green Mountain Coffee's annual sales revenue from coffee makers and K-cups.

From breaking the game to layout

Starbucks dominated the world in the mid-1990s, and this big guy almost dominated the entire American coffee retail industry. But there is always an opportunity in the eyes of those who care about it. By chance, Stiller heard an employee complain: every time I went to a client's company, I was forced to drink inaccessible instant coffee! At that time, he seemed to be electrocuted by something, and there was a flash of inspiration: "Why not sell our delicious coffee into the office?"

So Stiller immediately began to talk to Staples, an office supplies supplier, about a partnership. In 1997, Green Mountain Coffee reached a discount agreement and entered Staples' 600th office supplies supermarket in North America and entered its mail-order catalog to transport more than 450000 kilograms of coffee through this channel. This is an important step for Green Mountain Coffee to infiltrate the office market. Later, Green Mountain entered thousands of offices in the northeastern United States. In fact, most companies are happy to install the system because it helps prevent employees from sneaking out for coffee on the grounds that "the office coffee is too bad." In fact, nearly 1/3 of Green Mountain's more than $2 billion in sales come from selling coffee directly to the office.

In 1998, he made a strong man's wrist-breaking decision to close all his retail coffee shops and turn the ship around to cooperate with wholesalers. Stiller, who knows "channel is king", is targeting ExxonMobil gas stations and Stop & Shop convenience stores, customers ignored by big-name coffee makers such as Starbucks. In fact, Stiller's original high-end strategy has now undergone a benign fission: high-quality coffee products give him access to Mobil-branded convenience stores. after all, some stores and restaurants are more willing to pay higher prices for high quality.

In 2001, Green Mountain finally convinced ExxonMobil that entering its network would improve the quality of coffee in its convenience stores and bring them more customers. He beat 11 other coffee companies and signed a five-year contract with ExxonMobil to provide 1600 convenience stores and promised to ensure Green Mountain's dominance in the field within five years. In December 2003, stop&shop supermarket Company put Green Mountain Coffee in its more than 300 stores.

Before entering these channels, Stiller did something in advance in 1998 that would have a significant impact on the future-Krieger, which invested in the production of single-cup coffee machines and K-cups, became its first partner. At first, Stiller's partnership with Krieger was to produce K-cups of coffee at ExxonMobil gas stations and Stop & Shop convenience stores in his own factory, and then pay Krieger a royalty based on sales.

In June 2006, Green Mountain Coffee acquired all shares of its former partner, Krieger, with 2/3 of its previous year's revenue, or $104.3 million, to acquire its coffee maker and K-cup business. After completing the acquisition, Stiller locked in the single-cup coffee maker market, dividing the business into two major segments: green Mountain Coffee and Krieger Coffee Machine.

Before the merger, Krieger borrowed Gillette's "razor / razor blade" model, in which coffee machines were sold at cost and charged a license fee for K-cups. In fact, considering a few boxes of K cups and advertising expenses when selling coffee machines, Krieger coffee machines are a losing business. Where is Green Mountain's profit? Take a look at these small K cups-when consumers buy a Krieger coffee machine, they will continue to buy K cups. The license fee for K cups is $0.064 per cup. There are 1 billion K cups per year, and the licensing income is 64 million US dollars.

After the merger, the royalty model was played by Stiller, who allowed other coffee, tea or hot cocoa producers to use K-cup packaging on Krieger coffee machines, for which they only had to pay 6 cents per cup to Green Mountain. This move has enabled K-Cup to incorporate all beverages outside the coffee category into its own system-a growing number of beverage manufacturers are trying to bring their products into the K-Cup market. For a moment, "K-cup has become a Tetra bag for the coffee industry!" .

Green Mountain's innovative technologies for K cups, packaging lines and coffee machines have applied for 32 patents in the United States and 69 worldwide. Customers also agree that more than 90% of the consumers interviewed said they would strongly recommend the Krieger coffee machine to their friends, and more than 25% of them had given it as a gift. In August 2010, Green Mountain Coffee ranked the second fastest growing company in the world by Fortune magazine.