Imagine you're Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR ). Your
Keurig single-cup coffee brewer is wildly successful, and you recently struck
deals with Starbucks (NASDAQ: SBUX ) to carry the Seattle coffee giant's
grounds as exclusive cups for the machine . Shares of GMCR stock are up 700%
since 2009 and have more than doubled since Jan. 1, 2011. Green Mountain Coffee
revenue has increased from about $340 million in fiscal 2007 to a forecast of
$2.7 billion for fiscal 2011! It's good to be Green Mountain. Right? Well, now
imagine that after all this success at GMCR, a tiny family company in California
is shouldering in on your turf. Not only is it imitating your ideas but it
actually is using the fancy Keurig machines Green Mountain produces as a selling
point! It would be frustrating. It would be infuriating. But it appears to be
completely legal. Here's the score: Rogers Family Co., a coffee roaster and
distributor based in Lincoln, Calif., has developed single-cup pods completely
compatible with's Keurig famous coffee brewer. The closely-held company
apparently has been scheming on the development for four years , according to a
Bloomberg report, and sidesteps the patent protection of Keurig's K-Cups
because it uses a mesh screen on the bottom of the pots instead of plastic. But
here's the real payoff: Not only does this allow the family-operated business
to enter into the booming Keurig market, but it could give Rogers a chance at
making a big splash with perhaps the cheapest brew out there. A 12-pack of
Rogers Family's cups will have a recommended retail price of $6.99 and will be
distributed to supermarkets including Costco (NASDAQ: COST ), Safeway (NYSE: SWY
) and SuperValu (NYSE: SVU ). By contrast, Dunkin' Donuts (NASDAQ: DNKN )
branded K-Cups sell for $11.99 per 12-pack. Caribou Coffee (NASDAQ: CBOU )
branded K-Cups sell for $7.99 and up. Starbucks has not yet started selling its
Keurig-compatible pods but likely will be at the top of this range considering
its premium brand. Of course, flavor is the unknown here. When java junkies
reach for their morning coffee, they care about the taste perhaps more than the
price tag. But in this tough consumer spending environment, there's something
to be said for low-cost alternatives. Rogers Family Co. might have a hit on its
hands with its super-cheap cups. Presuming Green Mountain doesn't find a way
to shut it down, that is. Jeff Reeves is the editor of InvestorPlace.com. Write
him at editor@investorplace.com , follow him on Twitter via @JeffReevesIP and
become a fan of InvestorPlace on Facebook . As of this writing, he did not own a
position in any of the aforementioned stocks.
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