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McDonald's to Offer Organic Coffee

Thursday, October 27, 2005 (AP)
McDonald's to Start Selling Organic Coffee
By ROSS SNEYD, AP Business Writer

McDonald's Corp. will begin selling organic coffee at its New England restaurants next month, an arrangement that could propel growth for the Vermont-based roaster and help the fast-food chain compete for customers who avoid the Golden Arches in favor of a better cup of joe.

The deal calls for Green Mountain Coffee Roasters Inc., based in Waterbury, to supply Newman's Own Organics blend coffee to more than 650 McDonald's restaurants in Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Maine and in the Albany, N.Y., region.

Green Mountain Coffee earlier entered a separate deal to purchase beans, roast them and package them for Newman's Own. The coffee is certified as Fair Trade, a moniker that assures the beans are produced by farmers who are guaranteed a minimum wage for their harvests and are encouraged to practice organic and sustainable cultivation.

Steve Kerley, McDonald's regional vice president of operations, said pricing of the Newman's Own coffee would be set by franchise owners and he couldn't say whether there would be a premium. Whether the program is expanded nationally will be up to corporate officials at McDonald's headquarters in Oak Brook, Ill., he said.

More than 70 percent of the company's restaurants are run by franchisees.

Green Mountain Coffee sells its coffees through mail-order and directly to supermarkets, restaurants and convenience stores. The Newman's Own brand has been its best seller at supermarkets since it was introduced, said Robert Stiller, president and chief executive.

Green Mountain Coffee was founded in 1981 as a cafe near the Sugarbush ski resort. It expanded into mail-order and has grown aggressively in the past decade or so. It reported in August net income of $6.5 million in the third quarter, an increase 13 percent, on sales of $37.8 million, a 20 percent increase.


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