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Greenberg: Coffee Wars Brewing as Treehouse Takes on Green Mountain at Wal-Mart

Friday, 15 Oct 2010 | 1:19 PM ET

Get ready for the Green Mountain coffee wars—and not just from branded competition like Nestle .

AP

Without fanfare, Wal-Mart has started a rollout in select stores nationally of Grove Square, a private-label brand of coffee from Sturm Foods—a division of private label powerhouse Treehouse Foods .

Geared for use in Green Mountain’s Keurig coffee makers, Grove Square single-serve coffee is appearing side-by-side at Wal-Mart with other Green Mountain brands.

Why care? At Wal-Mart, Grove Square is priced 20 percent lower than Green Mountain. If that results in a price war, Green Mountain’s margins could take a hit.

Without naming names, Treehouse says private label coffee (using different technology that works in Keurig coffee machines) is starting to appear at other retailers, as well.

Green Mountain, which is facing patent expirations within several years, has shot back by filing a patent infringement lawsuit against Sturm.

Treehouse general counsel Tom O’Neil says the company hasn’t infringed on anybody’s intellectual property.

My take: Green Mountain has been in the news recently, after disclosing that it had overstated revenue and that it has received an inquiry from the SEC. In the end, however, it’s all about the business. And when it comes to competition, no matter what the product, private label is always a contender.

Correction: In an earlier version of this story, published October 15, it was erroneously reported that Treehouse described its new coffee cartridge product as a "private label K-Cup." Treehouse does not refer to its coffee cartridges, which use a different technology, as a "K-cup," a term used by Green Mountain.

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