Keurig Hits 52-Week High on Kraft Agreement - Analyst Blog

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The multi year licensing agreement with Kraft Foods Group Inc. ( KRFT ) helped Keurig Green Mountain Inc. ( GMCR ) hit a fresh 52-week high of $133.36 on Aug 22, 2014.

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Keurig Green inked a licensing, manufacturing and distribution agreement with Kraft Foods. Under the agreement, Kraft's branded coffees like Maxwell House, Gevali, Yuban and McCafe brands will be available in Keurig portion packs that are compatible with Keurig's commercial brewing systems.


Per the deal, Nestle USA will distribute the iconic Kraft coffee brandsin various Keurig portion pack formats like K-cup packs, K-carafe packs and Keurig bolt packs. The Kraft-branded portion packs will be available by fall 2014. Although the two companies will initially collaborate on the manufacture of single serve pods, Keurig Green will solely handle the manufacture of these pods once the transition period is over.

However, Kraft is not the only company with whom Keurig Green Mountain has joined to increase its market share in single serve coffee system. Last month, Keurig inked signed a deal with the popular coffee maker Nestle's U.S. division - Nestle USA. Per the multi-year agreement, Nestle's Coffee-mate branded coffee with creamer will be available in K-Cup packs that can be used on Keurig brewers. (Read: Keurig Green Mountain Soars to 52-Week High)

Again earlier this year, Keurig Green Mountain and Italy's coffee company Luigi Lavazza SpA inked a multi-year agreement to offer the latter's flagship coffee Lavazza in K-Cup packs for Keurig brewers.

Other then these agreements, Keurig Green Mountain already boast of similar strategic distribution agreements with huge names like Dunkin' Brands Group Inc. ( DNKN ), Unilever plc. ( UL ) and Starbucks Corp. ( SBUX ).

Investors are encouraged by these initiatives which further Keurig Green Mountain's goal of sustaining its dominance in the single-serve brewing market even after the expiry of its K-cup patents in Sep 2012. Through these agreements, the coffee maker is aligning with the strongest beverage brands to support a range of consumer choices and taste profiles under the Keurig Single-Cup Brewing system.

Keurig Green Mountain shares have been on the rise this year, backed by several strategic alliances which should help it maintain a leading position in the single-serve brewing category. The solid business momentum of the business of the company helped it to yield a solid year-to-date return of 78.7%


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: GMCR , DNKN , KRFT , UL , SBUX

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