Yesterday I attended the annual meeting of Green Mountain Coffee Roasters, Inc. When I had my first contact with Green Mountain Coffee Roasters (GMCR) about ten years ago, it was a relatively modest operation, less than a fifth of its current size. What impresses me even more than the sheer growth of GMCR is the fact that the company has achieved financial success without abandoning its commitment to social and environmental responsibility. In fact, that commitment may be one of the more important drivers behind the company’s business success.
If you don’t live in the northeastern United States, you may never have heard of Green Mountain Coffee (click here for the company’s story), but you might have heard of some of the other brands owned by GMCR. The company, currently headquartered in the central Vermont town of Waterbury, was founded by Bob Stiller in in 1981. The original incarnation of GMCR was similar to a brew pub—a coffee brew pub—with the coffee beans roasted on the premises (which at that time were in Waitsfield, a village a few miles south of the current location).
The business today is a far cry from the original café, with a 90,000-square-foot roasting and distribution facility and a business that employs over 1,600 people across North America. Alongside Green Mountain Coffee, the company’s brands include Tully’s, (sold on the west coast), Toronto-based Timothy’s, and Keurig, the maker of the best-selling line of single-serve coffeemakers in the United States.
What is intriguing to me is the way that GMCR has transformed itself over the last few years. Talking to various people at the annual meeting and listening to the presentations, it seems that the 2006 acquisition of Keurig, Incorporated, has been pivotal to the company’s success. Since acquiring Keurig, a manufacturer of single-cup brewing systems, GMCR has been able to adopt a strategy similar to Gillette’s. Gillette makes money selling razors, not blades; similarly, GMCR makes money selling coffee, not the Keurig units it is brewed in. However, GMCR is able to go even a step further than Gillette: Keurig machines can brew more than just coffee; tea, cocoa and even iced drinks can all be made with the same machine.
When I first met Bob Stiller, who is now chairman of the board, I was impressed by his passion for both the coffee business and the environment. That passion is still apparent today and is shared by many who work for GMCR. The company allocates at least 5 percent of pre-tax profits to a broad range of charitable causes that improve people’s lives both at home and abroad, protect the environment, and build demand for sustainable products. More than 30 percent of the coffee shipped by the Specialty Coffee business is “Fair Trade Certified.” This represents a 36 percent increase in volume over the prior year. The company’s purpose, printed at the front of the annual report, is “We create the ultimate coffee experience in every life we touch from tree to cup – transforming the way the world understands business.”
GMCR seems to be living up to that purpose and is setting an example that other companies would do well to follow. Moreover, the company appears very aware that with growth comes increased responsibility. Asked at the annual meeting about issues related to GMC-branded cups discarded by the side of the road, President and CEO Larry Blanford and others explained the company’s efforts to make the cups biodegradable. Introduced in 2006, the cups are all-natural, lined with bio-plastic and with a bio-plastic lid, and are compostable given the right conditions. Unfortunately, the municipal compost centers required to ensure the cup’s breakdown are in short supply in the United States, leading Larry to suggest GMCR was “out in front of society on this one.”
The company also recognizes that a similar issue exists with its K-Cups, the plastic containers used in the Keurig brewing system. While unwilling to commit to anything specific, Larry made it clear the company was committed to reducing the environmental impact of the over one billion portion packs shipped each year.
While at the meeting, I managed to sample some of the company’s newest coffee offerings. Those that know me will not be surprised to learn that I chose a cup of revv pulse, billed as a bold coffee blend with more kick. Revv pulse contains Ginseng and Guarana and is targeted at the high energy market. Mmm…” Hot Red Bull anyone?”
While it may have been the strategic decision to acquire Keurig that led to Green Mountain’s current success, the company’s values have always informed its approach to business, and they continue to do so. GMCR’s strong financial performance is evidence that a commitment to social and environmental responsibility can be integral to a company’s success.
In my post Investors first, everyone else second, I said that if brands hope to appeal to consumers through a commitment to ethical and sustainable production, they will need to get investors on board first. I think that Green Mountain is an example of a company that has had investors on board from the very beginning.
So what are your thoughts on GMCR? What other companies do you know of that have combined strong business performance while demonstrating social and environmental responsibility?
(3 votes, average: 5 out of 5)
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March 25th, 2010 at 5:35 pm
Excellent article. GMCR’s growth is just outstanding, especially when you look at the 5 year and 10 year charts. I was fortunate to spend the first 25 years of my life “across the lake” in upstate New York, commonly known as “God’s Country” because of the beauty and splendor of the mountains. I too have a passion for good quality coffee. GMCR has the product, timing, growth, and pricing for success. I would add they have an excellent accounting staff, because you MUST have financials in order for success. It seems GMCR is doing everything right… D. Theroux, investor