By introducing Dunkin K Cup portion packs and making them available exclusively

By introducing dunkin k cup portion packs and making

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in America’s fastest-growing single-cup brewing system. By introducing Dunkin’ K-Cup portion packs and making them available exclusively in our restaurants, we are giving people more occasions to enjoy Dunkin’ Donuts coffee and more ways to enjoy using the Keurig Single-Cup Brewing System. We believe this alliance of two brand leaders means incremental sales of GMCR, for Dunkin’ Donuts and for our Dunkin’ Donuts franchisees. GMCR president and CEO Larry Blanford stated, Dunkin’ Donuts has top quality coffee, an extremely loyal customer base and impactful advertising programs. Combine
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those assets with consumers’ enthusiastic response to Keurig’s Single-Cup Brewing technology and we believe this alliance represents a truly exciting opportunity for both companies, with the potential to strengthen Keurig brewer adoption by consumers in one of the fastest-growing categories of the coffee industry. According to The NPD Group/CREST, Dunkin’ Donuts served the most hot traditional and iced coffee in America (for quick-serve restaurants, year ending October 2010), selling more than one billion cups of hot and iced coffee every year. Dunkin’ Donuts was recently ranked number one in customer loyalty in the coffee category for the fifth consecutive year by the 2010 Brand Keys Customer Loyalty Engagement Index. Additionally, in 2010 Dunkin’ Donuts opened more net new locations globally than any other quick-serve brand. While Wall Street rewarded the stock price of GMCR on the news of the strategic relationships, Larry Blanford could not ignore the risks related to GMCR’s Keurig business. Although GMCR was based in Waterbury, Vermont, with a geographic footprint weighted almost exclusively to the U.S. and Canada, several global developments posed risks to Keurig’s future growth. Blanford was concerned about several issues. including product liability, protecting GMCR’s intellectual property, GMCR’s ability to integrate
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their acquisitions, and the effect of commodity costs on Keurig brewers. Coffee Consumption in the United States The U.S. population consumed more coffee than soft drinks in 1969. According to Jack Maxwell of Beverage Digest, U.S. consumption of coffee in 1969 was approximately 40 gallons per capita versus 20 gallons of soft drinks. By 1998, coffee consumption had fallen to 20 gallons per capita annually compared to more than 50 gallons of soft drinks consumed. But consumer preferences can and did change, responding to the availability of higher-quality coffee by drinking more coffee and reversing a three-decade decline. The National Coffee Association conducted a survey revealing that 80 percent of Americans drink coffee occasionally and over 50 percent drink coffee daily. The U.S. per capita consumption of coffee was estimated to be 424 servings, which included in-home and out-of-home consumption of roast, ground, instant, and ready-to-drink (bottled/canned) coffee.3 While the average consumption per drinker rose to over three cups per day, 18- to 24-year-olds who drink coffee averaged 4.6 cups per day, whereas those over 60 years old averaged only 2.8 cups per day.4 The total coffee market in 2010 was estimated to be 105
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billion cups or $34 billion (see Exhibit 1).5 Specialty coffee
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  • Spring '16
  • Harry Purcell

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