Will Green Mountain's Latte Creators Cannibalize Sales?


If you ever get bored with your standard morning cup of coffee, you might be in luck.

On Monday, Green Mountain Coffee Roasters officially unveiled its new Latte Creators packs for Keurig Vue Brewers which, apparently, will help you "transform your morning coffee into a decadent, steaming latte in a matter of seconds."

Keurig Vue Latte Creators. Image source: Green Mountain Coffee Roasters.

So how's it work?

In contrast to the same old standalone instant latte packs, Latte Creators is intended as a two-step process with which Keurig Vue system owners can mix and match either a Creamy Latte or Chocolate Mocha flavor with any of their existing favorite Vue coffee varieties.

On one hand, as Monday's press release pointed out, two-step cappuccinos and lattes for the Vue system aren't anything particularly new, with previously successful offerings coming from brands including Green Mountain and Barista Prima Coffeehouse. Those products, however, came with pre-selected combinations to dictate the choices consumers had.

Latte Creators, on the other hand, represents the first standalone frother packs made for the Keurig Vue brewing system.

That's all well and good for Green Mountain, especially considering it effectively requires customers use two Vue packs for every cup of coffee instead of one.

And if regular coffee, tea, cider, and even soup weren't enough to whet their appetites for versatility, consumers get to enjoy even more variety from their Keurig Vue brewers without significantly complicating the process.

Sounds like a win-win, right?

Well, mostly.

There's just one casualty
If you recall, last November Green Mountain teamed up with Italy's Lavazzo to launch the Keurig Rivo, a standalone machine that froths actual milk and uses various flavored Rivo espresso blend packs to simplify the process of making real espresso drinks at home.

Keurig Rivo System, Image source: Green Mountain Coffee.

Sure, the Rivo arguably serves a different niche, namely consumers who want real espresso without comparatively complicated machines.

But will Latte Creators narrow the gap between quick "cafe-style" beverages and the real thing, at least enough to discourage consumers from buying the Rivo system in the first place?

Then again, this could also be read as a signal of just how much more important Green Mountain's existing Keurig Single Cup and Vue brewers are to the company. After all, though investors have been keeping an eye out for any significant updates regarding how the Rivo system has performed in the three quarters since its launch, quarterly filings haven't gone far beyond simply mentioning the launch of the Rivo as one of its more "recent initiatives" for continued innovation.

Given the expiration of key portions of Green Mountain's K-Cup patents last September, it's arguably more important than ever for the company to distinguish itself with more unique single-serving offerings to continue gaining market share against a slew of private-label K-Cup makers.

In fact, without any other significant news to report, rumors that Green Mountain is failing to win incremental share from those private-label offerings were probably one of the driving factors behind Monday's 5.6% heavy volume sell-off. Still, even though at least one analyst stepped out on a limb to say that plunge was unwarranted, you can bet the folks at Green Mountain are keen to do anything they can to maintain as much of the market as possible.

In the end, if that means cannibalizing yet-to-be-significant Rivo sales in the process, then so be it.

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The article Will Green Mountain's Latte Creators Cannibalize Sales? originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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