Green Mountain Coffee Inc. F2Q08 (Qtr. End 03/29/08) Earnings Call Transcript

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2008-05-13 15:09:24.0

Tags: Green Mountain Coffee Roasters Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Mark Astrachan of Stifel Nicolaus.

Mark Astrachan - Stifel Nicolaus

Hey, good morning, everyone.

Larry Blanford

Good morning, Mark.

Frances Rathke

Good morning, Mark.

Mark Astrachan - Stifel Nicolaus

I guess just a few questions here, no particular order. In terms of your expectations for the third and fourth quarters, what have you baked in there as far as legal expenses are concerned?

Frances Rathke

Mark, this is Fran. We have, as we mentioned, this past quarter we incurred $1 million related to the lawsuit. We anticipate a slightly lower amount in Q3 and possibly a similar size, given we are anticipating going into litigation and the trial date is set in October.

Mark Astrachan - Stifel Nicolaus

Okay, great. And then shifting over to the Keurig Mini. In terms of thinking about that, I guess one is, is that going to be launched -- I think I heard Nick correctly is that going to be launched this holiday season?

And then secondly, as far as margins are concerned, would the profile there be similar to other At Home brewers that you guys have?

Nick Lazaris

Yes, Mark. This is Nick. And the product will be introduced this fall to support the upcoming holiday season. We expect shipments to retailers somewhere in the August-September timeframe. And the margins on this brewer are similar to the other margins on our At Home brewers.

Mark Astrachan - Stifel Nicolaus

Great. And then final question is just relating to the competitor action. I guess in terms of your thoughts on what your leading competitor is doing out there from a single-cup standpoint, in particular Tassimo, how have you seen their focus and their promotion of these? Are Starbucks products impacting retailers' shelf presence, promotion activity, and the like? And have you seen anything from other competitors that you may think that they can start to get in there in terms of having incremental shelf presence at some of these retailers?

Nick Lazaris

This is Nick. At the recent housewares show, which is the number one trade show for this category for retailers to attend, and this was in March, Bosch was reintroducing the Tassimo brewer for the fall season. They have been our number one competitor, and so we certainly respect their power in the marketplace, et cetera.

But I will say that the retailers that we work with were very excited about Keurig. They were not giving up any space to any competitor, Tassimo included, for Keurig. And in fact, they were, as I said in my comments, increasing their assortments and in many cases improving the merchandising associated with the Keurig system. So I think what that says is we are clearly number one, we're respected and it's always good to have competition.

 

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