A Growth story without the ads: Green Mountain Coffee
Adage recently posted an interesting article on coffee upstart Green Mountain Coffee. While other companies have been hammered by the recent downturn, Green Mountain has been on a tear as of late, posting triple-digit earning gains and a 60% sales jump in its most recent quarter.
Impressive numbers…it looks like Green Mountain is starting to become a coffee brand powerhouse, recently acquiring brands like Neumann’s organics & moving their business toward the magical 1 Billion USD mark; how are they doing this?
Building a Billion $ Brand with little marketing spend
Here’s a number that will shock some traditional marketers…Green Mountain says it only spent $17 Million on Marketing on a business that is upwards of $800 Million in revenue. What? To achieve this, Green Mountain is probably using a smart strategy where they leverage the Product as the ad and customers as the ad agency (see this speech by Jeff Jarvis ). According to AdAge, Green Mountain has been relying on sustainability efforts to build its reputation & brand. Historically, the company has avoided traditional marketing, considering itself a "discovery brand." Only recently has (more traditional) consumer marketing become a part of the equation.
With such incredibly low marketing costs, Green Mountain can afford to have ultra-high quality coffee, pay its people well, give back to coffee growing communities, and give back to charity.
And this is exactly what Green Mountain is doing.
A Values & Purpose Based Company
I’ve never been on Green Mountain’s website, so I hopped over for a quick look at what they are up to. When you click into the sustainability tab, you quickly discover that Green Mountain is a values based company with a strong sustainability driven purpose. They integrate their values with their business operations and "put their money where their values are" by donating 5% of their pre-tax earnings to social and environmental causes. Green Mountain has also long been an advocate of high quality, farmer friendly, Fair Trade coffee…it now seems that Fair Trade coffee is gaining more traction in the minds of consumers. Green Mountain reports that Fair Trade represents a third of their total volume.
Green Mountain’s story reminds me of Gary Hirshberg ‘s Stonyfield Farm Yogurt journey. I recently read Gary’s book . There is an interesting farming analogy in the book where Hirshberg likens advertising to fertilizer.
I (Gary) consider advertising to be the fertilizer of traditional business. You spray it on a field of consumers to grow their awareness and hopefully incite them to try your product. Then, you hope that a trial leads to a purchase, then to repeat purchases, and finally, if you are fortunate, to true product loyalty. But just as with conventional farming practices, where petroleum-based fertilizer is needed to grow each succeeding year’s crops, a fairly high % of your revenue has to be plowed back into buying more advertising to keep next year’s crop of product users growing. That money thus becomes unavailable for enriching your product and deepening your relationship with the consumers you already have. You’re left to depend year after on what your advertising can deliver. The day that a competitor runs an ad challenging your product, you have only a very thin top layer of customer loyalty to sustain you.
It’s great to see that you can build a Billion dollar consumer brand behind an inspiring purpose and very little marketing spend.
This is a business to watch…
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- Green Mountain Coffee Roasters To Prove It Is Green (ecofriendlymag.com)
- Sustainability and the Logic of the Perpetual Upgrade (blogs.harvardbusiness.org)
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- Richard Seireeni: How Is Green Business Doing Today? (huffingtonpost.com)