Green Mountain's New Keurig Plan Is Smarter Than You Think

Green Mountain Coffee Roasters turned heads today by announcing that its next brewing platform will be able to make a full pot of coffee.

It may seem comical at first. Green Mountain's Keurig set itself apart by making individual servings of premium java. Why would it bother to cater to the market that wants a full carafe when it has spent the past few years preaching about the benefits of single-serve portions?

However, dig a little deeper and the Keurig 2.0 Brewing System with its ability to brew both K-Cup and the new K-Carafe packs is a brilliant move by Green Mountain.

Let's start by talking patents. It's now been nearly 16 months since Green Mountain's K-Cup patents expired. This makes it possible for anyone to make a portion pack that fits into Keurig brewers without having to go through Green Mountain.

Green Mountain was savvy enough to acquire many of the leading K-Cup makers in recent years. It also established partnerships with Starbucks and several other major brands in the world of coffee. Naturally, this isn't stopping supermarket chains from offering private-label K-Cups, and brands that aren't contractually tethered to Green Mountain can dive in whenever they want with third-party refills. However, the new proprietary K-Carafe sets a new clock on patent protection for the portion packs that can make a 28-ounce pot of joe. Everybody who isn't working with Green Mountain is effectively shut out of this market.

This is bigger than you think. Keurig 2.0 hits the market this fall, and renegades who have gone the unlicensed route in putting out K-Cups won't be able to offer their brews across that machine's functionalities. Consumers will know that, and that will give those craving consistency a preference to buy K-Cup and K-Carafe packs from licensed Green Mountain partners.

Yes, this is the same argument that Green Mountain used in trying to get java heavies to play nice with the company to get into the Keurig Vue platform, but Keurig 2.0 will be a game changer. The Vue has struggled since it's a high-end platform with a limited ecosystem. It's the same thing that has kept the success of Starbucks' Verismo and other high-pressure coffeemakers in check. Since none of these machines brew the cheaper and more widely available K-Cups -- without springing for a pod adapter or making surgical alterations -- we continue to live in a world where the original Keurig remains the single-serve system of choice. Keurig 2.0 plays nice with the existing K-Cups, but it also offers the carafe option that's available only to licensed K-Carafe suppliers.

Let's be fair: Green Mountain needs this. Growth has been slowing at the former speedster, and when it reports quarterly results next week, analysts see a modest 5% uptick in revenue. Profitability is expected to grow substantially faster given favorable coffee cost moves over the past year, but Green Mountain needs to get sales growing again.

Keurig 2.0 -- and, yes, the new K-Carafe -- are the caffeinated catalysts that should propel the stock higher later this year. It is a big deal. Don't laugh at the carafe.

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The article Green Mountain's New Keurig Plan Is Smarter Than You Think originally appeared on Fool.com.

Rick Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool recommends Green Mountain Coffee Roasters. It recommends and owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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