Green Mountain Coffee Roasters Increasing Tully's Coffee Wholesale Business

Green Mountain looks for bigger space to roast coffee after Tully's deal Green Mountain Coffee Roasters is shopping for a bigger space for three roasting machines and about 85 employees who work at Tully's Coffee's wholesale business, which Green Mountain acquired Friday for $40.3 million.

By Melissa Allison

Seattle Times business reporter

Tully's founder and Chairman Tom O'Keefe speaks about how the company has sold its wholesale business to Green Mountain Coffee Roasters of Vermont.
Related

Archive | Tully's hopes to expand with licensed stores
Green Mountain Coffee Roasters is shopping for a bigger space for three roasting machines and about 85 employees who work at Tully's Coffee's wholesale business, which Green Mountain acquired Friday for $40.3 million.

The Vermont roaster wants to expand here and needs at least 120,000 square feet to roast Tully's, Green Mountain and Newman's Own brand coffees for distribution in the Western U.S., Green Mountain executives said at a press conference this morning.

The current Tully's building, which is more than a century old and sits next to I-5 south of downtown Seattle with a green neon "T" perched atop it, has about 80,000 square feet.

"It's a great, historic location. It's just not conducive to supporting the growth we need," Green Mountain CEO Larry Blanford said in an interview. He expects to complete the move by this fall.

Tully's remaining 45 employees will stay in the current building, overseeing its 165 retail stores and a fledgling international business, which in partnership with another company opened two stores in Singapore last year.

Tully's Chairman Tom O'Keefe reiterated the chain's plans to open 200 more shops in grocery stores and other locations during the next 12 to 18 months.

Green Mountain will begin roasting Tully's coffee at its two other facilities in Vermont and Tennessee, expanding the Seattle brand's reach east of its current distribution, which stops at grocery stores in Chicago.

The Vermont company, which unlike many roasters does not have its own chain of retail stores, also plans to expand distribution of the Green Mountain and Newman's Own coffee brands in the Western U.S.

It has a lighter roast profile than Tully's and currently distributes a co-branded Green Mountain/Newman's Own coffee to 650 McDonald's stores in the Northeast.

Green Mountain is looking at spaces between south Seattle and Olympia that would allow it to expand to 200,000 square feet over the next few years. It also expects to hire 40 to 80 more employees in that time, Chief Operating Officer Scott McCreary said during the press conference.

Green Mountain has been one of the best performing companies in the coffee industry and on Wall Street during the economic downturn. It had sales of $500 million last year, and its stock hit a new 52-week trading high of $50.49 last week.

O'Keefe said that Tully's has not decided how much of the $40.3 million it received from the sale will be distributed to shareholders. About $26 million went to repay Tully's debt, and another undisclosed amount will help rejuvenate and expand its retail business.