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Encapsulated: Coffee capsules are showing the best potential for growth in the coffee industry

From the May 2011 issue.

Coffee capsule technology has led to a new model for doing business, where machines are locking in consumer loyalty.

It’s not often that a coffee roaster makes regular headlines as one of the top performing stocks on the Nasdaq stock exchange.

In the last year, however, Green Mountain Coffee Roasters (GMCR) have consistently found themselves topping Bloomberg news briefs. On 5 May, the company soared 21 per cent, the second biggest gain in the Russell 1000 Index. In the last year, their stocks surged over 200 per cent, including an astounding 41 per cent hike that came after the company announced a distribution deal with Starbucks.

The hype around the deal and its ensuing aftermath was not just about the pairing up of two of America’s largest players in coffee, but weighed heavily on the product they were pairing up on: the announcement that GMCR’s Keurig single serve system would be available with Starbucks’s brew, and be available in the coffee chain’s outlets and websites by 2012. In the last year, any news around GMCR and coffee capsules has led to jump after jump in the company’s stock and with good reason: coffee capsules alone generated almost US$2 billion in sales for GMCR, who are currently sitting as American market leaders.

In an industry looking for the next area of growth, coffee capsules are clearly coming out ahead. GMCR are not alone in benefitting from their coffee capsules endeavours. Over the last few years, major players around the world have identified coffee capsules, also known as single-serve or portioned coffee, as the next big thing in the industry. 

“The portioned coffee market is booming and continues to be the fastest growing part of the coffee market, by both value and volume,” says Julien Liew, Corporate Public Relations and Public Affairs Manager for Nestlé Nespresso SA, who are market leaders in Europe and around the world in coffee capsules, having refined their own system over the last 25 years.

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