Monday, November 21, 2011

Green Mountain Coffee: A Modern Lesson In Sucking Up

I've been waiting to write about Green Mountain Coffee (GMCR) for a while, but my insider wanted me to wait a while.  Just got the green flag, so Boogitie Boogitie Boogitie!

There has been some growing discontent with the stock market writers, investors, and others.  Seems a bit of it has spilled into court too.  This relates only slightly to all that.

Happy GMCR workers
My source was working in the Knoxville, TN plant and mentioned something that struck me as odd.  The company had one of those Town Hall type meetings where the whole shift was herded into one room and shown a video of what a bang-up job all the workers were doing and what a fantastic job management was doing.

What both I and my source found odd was how the overflowing warehouses were addressed.  Some corporate bigshot (source could not remember precisely) spoke of warehouse workers complaining that aisles were full of stock.  The explanation given was that they had a lot of sales, so the employees should expect that they have a lot of stock.  Source thought that was odd, I thought it was total BS.

A GMCR warehouse.
If you have loads of orders and are outstripping your production, then your warehouses should be going empty, not filling up.  That is unless you have a shortage of warehouse space to begin with, then the warehouse workers would be used to overfilled warehouses.

Some "Fair Trade" propaganda.
I will not give away too much detail, least source get in trouble, but another big item was the drop in overtime accompanied by letting-go of temps after the overflowing warehouse information was set wild.

Green Mountain tries to cultivate an aroma of environmentalism, community, and being the "really nice" coffee company.  Of course, the people who fall for this crap are willing to pay $100 - $180 for a coffee maker that only makes one cup at a time vs. a $20 coffee press that can do the same thing better.  Plus, the Green Mountain K-Cup packaged coffee costs a lot more than regular coffee.

GMCR's K-Cup
Another item I just discovered, GMCR's K-Cup (proprietary single-serve coffee containers) patent is set to expire in September, 2012.  From my amateur observation, those cups and filters can be replicated quite easily.  My source says the packaging machines have gone through several evolutions in the Knoxville plant.

My analysis is nothing new, Green Mountain was the early adopter and endured the high cost curve that early adopters usually take.  Remember your friend who bought the $800 home CD player in the early 1980s?  Same effect.  Soon competitors can move in, buy better equipment, man a plant with experienced former GMCR temps and clean up.

Clean up if this fad of single-serve plastic coffee packs continues, which seems improbable.  The "green" of Green Mountain has the markings of an illusion, a fad, for people to have the 'cool looking' coffee maker in the kitchen next to the recycle bin for all of the little plastic and aluminum cups.  The same folks with the Leaf in the driveway and neon light-bulbs throughout the house.

You know who else was big on greenness, don't you?

What does this have to do with Socialism?  Another thin link, probably nothing to be alarmed about.  The new mayor of Knoxville crowed during her campaign that Green Mountain located in Knoxville, TN partly because the unemployment center gave the Career Readiness Certification Exam, from the American College Test folks.  Every new machine operator and quality control tech. (the mayor said 300 to open the plant) needed that certification and there was a government office in Knoxville handing out the paper.  Why couldn't Green Mountain have ACT show up and give the tests to their candidates?  The typical rent-seeker answer is, 'why should we do it when the government can do it for us.'

Green Mountain Coffee Roasters is shaping up to be the Solyndra of the brewed beverage industry, with a cheaper bill to the tax payers.

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