They might take their coffee differently, but the present and the past president and CEO of Green Mountain Coffee Roasters have a lot in common. These Ohio-born businessmen both started their careers in the appliance industry, incoming CEO Brian Kelley at General Electric and previous CEO Larry Blanford at Maytag. But Kelley has a lot to live up to if he wants to outdo his predecessor, Blanford, who's been at the company the past five and a half years.
Reporter Gina Bullard: Tell me who the genius was who decided to buy the Keurig patent?
Larry Blanford: Well, that goes back to the founders.
Green Mountain Coffee Roasters was started by Robert Stiller in 1981. It was a basic small café in Waitsfield, roasting and serving coffee. To say no one knew it would be one of the fastest growing companies in the U.S. would be an understatement. Demand grew; local restaurants and inns started craving the brew. But it was in 2002 when the company got into the business of single-serve that everything changed. Green Mountain paid $14.4 million for less than half of Keurig. Four years later it bought the entire business, including the patents.
"That truly was a brilliant move and obviously Keurig, that whole platform, has driven our growth ever since," Blanford said.
And although two of those patents expired in September, Blanford has made great strides by partnering with Starbucks and other potential competitors. When Blanford started, the company had around 700 employees. It's now up to 5,800-- 1,700 which are in Vermont.
Gina Bullard: Has the company plateaued?
Larry Blanford: Definitely not. We have had five, six years of tremendous growth and just because we're getting so large the rate of growth will slow a bit due to the law of large numbers.
Over the past couple of years, shareholders have been on a ride, with shares rising from a low of $5 in 2008 to an all-time high of $110 in 2011. They tumbled after Wall Street analyst David Einhorn attacked the company's accounting practices saying the stocks were overvalued. Those accounting practices are currently being investigated by the Securities Exchange Commission. The SEC is also looking into a questionable stock sale by founder Robert Stiller that led to his removal as chairman of the board of directors.
Gina Bullard: How serious is the SEC case?
Larry Blanford: The SEC case is a little over two years. It's an inquiry. We have to respond to questions as necessary at the end of the day. I have the highest level of integrity and confidence in all of our personnel.
"I think uncertainty always hurts companies. It provides investment opportunities, but it always makes noise," said Allison Kingsley, a business professor at the University of Vermont.
Kingsley says the noise around the SEC investigation could hurt the company in the end.
"Because there's a track record of not managing results, well, there were low expectations and they beat those expectations, soundly beat the critics, certainly people who were uncertain. Uncertainty is an opportunity, but can be a real liability," Kingsley said.
We also got an exclusive interview with new CEO Brian Kelley to discuss how he plans to address those challenges at Green Mountain Coffee. We'll have more on that Wednesday night at 6 p.m.
Kelly comes from beverage giant Coca-Cola, which does more than just sell soda. He says his experience as a chief product supply officer and how quickly he was rising through that company make him suited to move GMCR forward.
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