[Congressional Record (Bound Edition), Volume 147 (2001), Part 19]
[Senate]
[Pages 26277-26280]
[From the U.S. Government Publishing Office, www.gpo.gov]



                         ADDITIONAL STATEMENTS

                                 ______
                                 

       HONORING ROBERT STILLER AND GREEN MOUNTAIN COFFEE ROASTERS

 Mr. LEAHY. Mr. President, I rise today to congratulate Robert 
Stiller, Founder and Chief of Green Mountain Coffee Roasters, who has 
been awarded the ``Entrepreneur of the Year Award'' by Forbes Magazine.
  Before establishing success on the national level, Bob owned several 
retail coffee stores in Vermont and Maine. Unable to afford 
advertising, he gave away free samples at wine and food festivals and 
to organizations like the Cub Scouts and Ronald McDonald House. Always 
in search of new customers, Bob began selling his coffee to high-end 
restaurants and to gas stations with a goal of serving the same high-
quality of coffee at both. That

[[Page 26278]]

strategy and innovation contributed to his company's growing success.
  Stiller's success stems from his willingness to take risks within the 
business world and his knowledge of modern technological advantages. By 
investing in innovative packaging tools that extended the shelf-life of 
their coffee, Green Mountain Coffee Roasters has made significant 
breakthroughs in modern brewing. They pioneered efforts to do what few 
coffee vendors have been able to master: keeping convenience store 
coffee fresh.
  Green Mountain Coffee Roasters ranks 16th on the ``Forbes 200 Best 
Small Companies'' list, and sales have continued to grow an average of 
24 percent over the last five years. New roasters they recently 
purchased will allow them to package and sell over 40 million pounds of 
coffee a year, available at convenience stores, gas stations, 
supermarkets, offices, and restaurants nationwide. And their stock has 
more than doubled in the past 12 months, outperforming competitors like 
Starbucks, and Peet's Coffee & Tea.
  Again, I congratulate Bob Stiller and all his employees at Green 
Mountain Coffee Roasters for receipt of the Forbes award. I ask that 
the Forbes Magazine article, ``Entrepreneur Of The Year: Java Man,'' 
and a Rutland Daily Herald article, ``Coffee Company, Founder Grab The 
Spotlight,'' be made a part of the Record.
  The material follows:

                 [From Forbes Magazine, Oct. 29, 2001]

                   Entrepreneur of the Year: Java Man

                            (By Luisa Kroll)

       Bob Stiller's long-shot bets have turned Green Mountain 
     Coffee Roasters into one of the smartest small companies in 
     America.
       Don't let his look of blissful relaxation fool you. Robert 
     Stiller's head is constantly boiling with new ideas, many of 
     them at odds with those of almost everyone around him. Some 
     of the ideas lose money. Every now and then one makes a 
     bundle.
       Stiller's first big hit was selling rolling paper on the 
     drug-sodden campus of Columbia University in the early 1970s. 
     His brand, E-Z Wider (a little jab at the cult film), had 
     double the width of competing brands. The paper wouldn't feed 
     into the machine properly, causing tearing. It was 
     scientifically processed; Stiller discovered that storing a 
     bobbin of paper for three weeks in a humidified room 
     prevented the raw material from ripping. ``People expected to 
     see potheads, but we were more efficient at paper conversion 
     than any manufacturer at the time,'' he recalls. E-Z stoked 
     its sales to $11 million before Stiller and a partner sold 
     out in 1980, each pocketing $3.1 million.
       Twenty years later he still has a knack for 
     experimentation--in the humble business of selling coffee 
     beans. Founder and chief executive of Green Mountain Coffee 
     Roasters (nasdaq: GMCR--news--people), 58-year-old Stiller is 
     constantly trying out new technologies, backing other 
     entrepreneurs with untested ideas and taking risks with 
     suppliers that, on the face of it, appear slightly crazy. 
     ``Bob has that sense of not what is, but what could be,'' 
     says Nick G. Lazaris, chief executive of Keurig, which makes 
     coffee-brewing machines and is a partner of Green Mountain.
       The road less traveled is strewn with riches. Green 
     Mountain ranks 16th on the Forbes 200 Best Small Companies 
     ranking, its second year on the list. Sales have grown an 
     average 24% over the last five years to $84 million for the 
     year ended Sept. 30, 2000; earnings per share have been 
     growing at 43%. In the quarter ended July 7, net income rose 
     67%. Its stock has more than doubled in the past 12 months, 
     outperforming those of both Starbucks and a closer rival, 
     Peet's Coffee & Tea. Stiller's 48.5% stake is worth $89 
     million.
       Green Mountain has put down deep roots near its 
     headquarters in bucolic Waterbury, Vt. Three of every 10 
     pounds of roasted beans are sold in Maine, New Hampshire and 
     Vermont. But this is a national company, deriving 95% of its 
     revenue from 6,700 wholesale customers that include 
     convenience stores, gas stations, supermarkets, offices and 
     restaurants.
       Lesson: Don't forsake marketing. if you cant afford it, try 
     giving away your product.
       A born tinkerer, Stiller spent weekends and holidays during 
     his youth toiling at Stillman Manufacturing, his dad's Bronx, 
     N.Y. company that made one of the first tubular heating coils 
     for electric stoves. While still in high school, Stiller 
     designed one machine that handled milling, cleaning and 
     threading of a heating element. College was a chore; he 
     couldn't maintain a C average--or what the college called a 
     proper attitude--to remain at Syracuse University and ended 
     up with a degree in business from Parsons College in 
     Fairfield, Iowa in 1967. He landed at Columbia as a data-
     processing manager.
       After cashing out of the rolling paper business, Stiller 
     found himself at his ski condo in Sugarbush, Vt. wondering 
     what to do next. One night, as he enjoyed a rare cup of 
     coffee at a restaurant, he woke up and smelled the 
     opportunity. A couple of days later he visited the small 
     roaster in Waitsfield, Vt., where the restaurant bought its 
     beans. For the next few months he roasted his own beans, 
     using a hot-air popcorn popper at one point, a cookie sheet 
     at another, brewing batches of coffee for friends. Stiller 
     ended up buying the Waitsfield store with a partner and 
     giving the store owner an equal one-third stake in Green 
     Mountain. Within two years he became the sole proprietor, 
     buying out both partners for $100,000.



       The business seemed doomed from the start. Holed up in an 
     office over a movie theater, Stiller lent the company $1 
     million, but still had to pay salaries with credit cards. His 
     $30,000 line of credit was snatched from him after he went to 
     the main branch of the bank in search of more money. What 
     loan officer dared believe in this venture? This was a decade 
     before Starbucks reached the East Coast, and a cup of joe was 
     just something to wash down the morning eggs and toast. 
     Stiller added retail stores in Vermont and Maine, and 
     insisted on roasting only arabica beans, grown at higher 
     altitudes and pricier than the robusta variety. Unable to 
     afford advertising, he gave away samples at wine and food 
     festivals and to organizations like the Cub Scouts and Ronald 
     McDonald House. The red ink flowed, $1.4 million cumulatively 
     from 1981 to 1985.
       Always on the prowl for new customers, Stiller began 
     selling to high-end restaurants and specialty stores. He 
     bought a personal computer and hired a programmer to write 
     software that traced customers' orders, deliveries and 
     payments. Ever since, he has invested heavily in technology, 
     becoming one of the first customers of Praxis, which 
     developed a program to monitor and adjust heat levels in the 
     roasters appropriate to each bag of beans. ``Some say there 
     is an art to great coffee,'' says Stiller. ``I don't care how 
     artistic you are, there are too many factors in play. You 
     need the technology.''
       Which is why the fellow with the tube-bending machine and 
     the rolling-paper process has installed $2.5 million worth of 
     software from PeopleSoft to track distribution, 
     manufacturing, sales and personnel. At the time this software 
     project got under way Green Mountain had only $33 million in 
     sales and was PeopleSoft's smallest customer for the product. 
     ``Green Mountain,'' says Michael Frandsen, PeopleSoft's 
     general manager of supply chain management, ``is one of the 
     most aggressive small companies I've come across.''
       As when Stiller ignored the grumbling of some board members 
     over selling his premium coffee to grungy gas stations. He 
     thought it was a good way to spread the brand; the trick was 
     to make sure the coffee at ExxonMobil was brewed as carefully 
     as it was at New York's Harvard Club. So along with its 
     beans, Green Mountain bundled services and tools, including 
     coffee machines, cups, banners and training. Stiller created 
     one- and two-day courses for customers with instruction about 
     coffee farming, grinding and filtering. Now ExxonMobil is its 
     biggest customer, representing 17% of sales last year. Last 
     November Green Mountain signed a five-year agreement, beating 
     out 11 rivals, to supply all 1,100 ExxonMobil company-owned 
     stores and 500 franchise locations.
       Another long-shot bet: backing three unknown entrepreneurs 
     peddling a single-serve coffee system. At the time, they held 
     the patent on filter-wrapped individual portions of ground 
     coffee, but had no product ready for market. Stiller invested 
     $150,000 for a 1% stake in Keurig. Green Mountain patiently 
     worked with them on product quality and flavor. Finally, in 
     1998, the Keurig machine rolled into offices like 
     PricewaterhouseCoopers. Green Mountain, which produces K-Cup 
     individual packages of coffee at its factory, pays Keurig an 
     undisclosed royalty based on the number of packages it sells. 
     Last year K-Cups contributed 15.7% of Green Mountain's 
     revenues.


                              DAILY GRIND

       A grower of fancy coffee gets maybe a dollar a pound. How 
     come you pay $9? Here's how the wholesale price adds up, even 
     before the retail markup. Cost of 1.25 pounds of green beans* 
     $1.25; shipping, 0.16; other costs of goods**, 3.22; 
     overhead***, 2.46; profit****, 0.62; wholesale price*****, 
     $7.71.
       *20% weight loss in roasting. **Packaging, services, cups. 
     ***Selling, sampling and administrative costs. ****Operating. 
     *****Average yield to Green Mountain including supermarket 
     coffee and brewed cups. Source: Forbes estimates, using Green 
     Mountain's FY 2000 financials.
       Leaning forward so often, Stiller has occasionally fallen 
     off his perch. Anxious to expand, he took the company public 
     in 1993, but couldn't meet Nasdaq listing guidelines and 
     traded for four years on Nasdaq's minor league system (called 
     the Nasdaq SmallCap Market). With the $11.5 million raised, 
     he invested in mail-order catalogs, opened five retail stores 
     and hired a bunch of seasoned outsiders. He also spent 
     $500,000 on packaging equipment that flushes out the oxygen 
     with puffs of nitrogen to improve shelf life.
       Stiller wanted to invest now in anticipation of future 
     growth. Such improvements

[[Page 26279]]

     had a cost. The company lost a combined $4.7 million in 
     fiscal 1993 and 1994. For ten months Stiller stopped matching 
     contributions to the 401(k) program, and imposed a hiring 
     freeze. The bigger growth lay with the wholesale business. 
     Green Mountain shuttered its 12 stores in 1998, at a cost of 
     $1.3 million.
       Lesson: Don't be afraid to increase capacity for a level of 
     business that doesn't yet exist.
       Vermont being Vermont, it goes without saying that Green 
     Mountain strives for a do-gooder image, giving away 5% of 
     pretax profits to ``socially responsible'' causes. ``I'm not 
     doing it because I want to give money away to charities,'' he 
     confesses. ``What we're doing makes the most business 
     sense.''
       Example: providing startup funding for 100 small-scale 
     farmers who formed a cooperative in Sumatra, Indonesia. Since 
     then, production has increased almost sixfold--18% of its 
     arabica going to Green Mountain. Stiller was one of the early 
     backers of ``fair trade'' coffee, which pays farmers what 
     they need to break even and clear a small profit. All this 
     draws customers like Columbia University and natural food 
     stores.
       Stiller has gradually backed away from the day-to-day 
     business, acting more as teacher than taskmaster. He 
     meditates 45 minutes every day and, despite enduring the 
     occasional pair of rolling eyes, nudges his staff to study 
     ``appreciative inquiry,'' a management technique developed at 
     Case Western Reserve University that encourages people to 
     learn from their successes--what produced a great batch of 
     roasted beans, for instance, or the last deal that closed--
     instead of their mistakes.
       Is this still a growth company? Probably not the one it 
     used to be. The Delta Shuttle will be buying less, and 
     Starbucks, with help from Kraft, is muscling into the 
     grocery-store channel. Stiller predicts sales growth will be 
     15% to 20% next year, below its five-year average. But he's 
     still a risk-taker. He is spending $2 million for a couple of 
     roasters, which will boost capacity from 15 million pounds to 
     40 million pounds a year. It will be a long time before 
     demand catches up. But Stiller is sure that day will come.
                                  ____


                [From the Rutland Herald, Nov. 5, 2001]

               Coffee Company, Founder Grab the Spotlight

                           [By Bruce Edwards]

       An interview with Robert Stiller, the founder and president 
     of Green Mountain Coffee Roasters in Waterbury. Stiller was 
     recently named Forbes' magazine first ``Entrepreneur of the 
     Year.'' The magazine also ranked the company as one of the 
     ``200 Best Small Companies in America.''
       Question: When you started Green Mountain Coffee Roasters 
     in 1981, did you have a vision for the company. And are you 
     surprised at the success you've achieved?
       Robert Stiller: I didn't envision the success the way it 
     has come about. I felt we may have been further along in 
     getting the coffee out there because I always felt there 
     isn't great coffee out there. When people get used to 
     drinking great coffee, they just don't go back to the 
     commercial grades. So, I knew that was going to work. I 
     really didn't envision the awards. I really didn't feel we 
     would be as strong as we were with the social type of issues 
     like the organic and the fair trade coffees.
       Q: When you think of Vermont you think of maple syrup. 
     Coffee, on the other hand, is hardly indigenous to the state. 
     Where did you come up with the idea for a coffee company?
       Stiller: Actually, a friend had started a small shop at the 
     end of 1979 with a couple that had come up from Connecticut. 
     Their brother had been in the coffee business and they opened 
     a small shop here in Vermont. I got to know them and I wanted 
     to expand that concept. I really wasn't much of a coffee 
     drinker at the time. When I had great coffee, it was like 
     this is terrific and we wanted to carry that concept further.
       Q: What kind of competition do you face? There are 
     obviously a lot of coffees out there and your coffee is a 
     premium brand.
       Stiller: We provide a better product that people are 
     willing to pay more for. Sometimes they'll use less of our 
     coffee than the commercial coffees and get a more satisfying 
     cup of coffee. There are ways to get around the economics of 
     it. People will also find it a little bit finer than some of 
     the commercial grades and get better extraction in the 
     brewing process. We compete by offering better solutions to 
     customers, like a supermarket, to sell the product. We 
     merchandise the coffee better. We work with the staff to 
     educate them and support the product. A lot of the commercial 
     companies don't want to get into (that). They just want to 
     put it on the shelf and have it sell. We differentiate 
     ourselves by offering the higher levels of service that in 
     turn provide a value to the consumer.
       Q: Where do you buy most of your coffee beans?
       Stiller: Central and South America. Also Mexico. We have 
     other coffees that come from Africa and Indonesia.
       Q: What makes the quality of your coffee beans different?
       Stiller: It would be the taste profile of that particular 
     coffee being representative of the area that it comes from. 
     You want the taste to sort of epitomize where that coffee 
     comes from. And we are very selective in getting the taste of 
     that coffee as good as it can be. You also look at the 
     highest-grade coffees. Each of the countries has a grading 
     system. And we would also select the highest grades 
     available. A lot of companies are just interested in the cost 
     aspect and don't look for the taste profile.
       Q: How much coffee do you import each year and is it all 
     processed in Waterbury?
       Stiller: We're about 12 to 13 million pounds of green 
     coffee a year. We roast all the coffee here and package it 
     and ship from here.
       Q: What's the size of the Vermont operation?
       Stiller: In the Waterbury area, we employ about 300 people. 
     There's a little over 500 in the organization. We have a 
     90,000-square-foot production, roasting, warehousing 
     facility. We just purchased a couple of roasters that will 
     substantially increase our roasting capacity. With the new 
     roasters we'll be able to roast over 40 million pounds a 
     year.
       Q: Much of your business is wholesale as opposed to retail?
       Stiller: We don't have any retail shops. The supermarkets 
     in some industries define that as retail. The bulk of our 
     coffee is sold 25 percent through the supermarkets, about 25 
     percent through the office distributors and then another 25 
     percent through convenience stores.
       Q: How were you able to land these large contracts like the 
     Exxon Mobil convenience stores, Amtrak and Delta airlines?
       Stiller: Mobil came to us over 10 years ago and we got one 
     convenience store that was right across from a Dunkin' 
     Donuts. The owner said if you can do anything with this 
     location I'll talk to you about the rest of the stores. And 
     we increased the coffee sales of the store about five times. 
     So we got the rest of that chain, which led to recognition in 
     the area and we just kept getting more convenience stores. 
     They tested us against all the other coffee companies and 
     found that our products did indeed sell better. We offered 
     better support. And then we signed a contract with Mobil for 
     five years.
       Q: Your company has also come up with some technological 
     innovations.
       Stiller: I think the whole convenience store area was 
     initiated with our use of air pots or the vacuum pump, 
     thermal server. Because historically the coffee wasn't able 
     to be kept fresh at the convenience store level. And with 
     those servers we were able to offer a variety of coffees with 
     a much longer shelf life than coffee sitting on a burner.
       We were one of the first to recognize the sustainable issue 
     with coffee. We tried to work with the farms to improve the 
     farms, the product and the workers. It makes sense from a 
     business point of view that if the people are taken care of 
     you're going to have a better product. Nobody that is treated 
     poorly is going to put their heart and soul into developing a 
     good coffee.
       Q: It appears you followed Ben & Jerry's philosophy of 
     social responsibility.
       Stiller: It's been very important to us. I think it's been 
     very motivational to people in the company knowing that they 
     are achieving a greater good in the world through what we do. 
     We've had sustainable coffees for quite a while. And that led 
     the industry in organic and fair trade (coffees). We've also 
     encouraged our customers like Exxon Mobil. It was the first 
     convenience store on a national level to have an organic 
     coffee as their coffee of the month. This year they've done a 
     fair trade coffee.
       Q: What do you mean by a fair trade coffee?
       Stiller: A fair trade coffee is certified that the farm 
     that it comes from is a co-op. It's owned by the farmers. 
     They get a minimum wage. So that they can live off of that. 
     It's a major factor right now in that coffee is the second 
     largest commodity behind oil. But unlike oil, coffee is a 
     product of the people. There are 25 million farmers involved 
     in farming and developing coffee. And about 75 percent of 
     them are small farms. So if a farmer can't earn a living and 
     support a family with coffee, what do they do? They turn to 
     the government for support or they can turn to other illegal 
     crops. We're talking about a life and death situation for 
     these people. The break-even point for coffee is about 85 or 
     90 cents (a pound). It doesn't pay for them to produce good 
     coffee. Coffee prices are below 50 cents right now. So a lot 
     of the work that goes into good coffee is not happening. 
     Sometimes they will pick coffee four or five times during the 
     harvest season. Now, they're picking it once because they 
     can't afford the pickers. This whole fair trade initiative 
     was really developed to guarantee economic stability for the 
     farmers and with that almost guarantees more of a democracy 
     in a lot of these Third World countries because it provides 
     that economic stability.
       Q: Has NAFTA, the North American Free Trade Agreement, had 
     any effect on your business?
       Stiller: It doesn't really come into play. I think it's 
     more for manufactured goods as opposed to agriculture.
       Q: You have a director of social responsibility to oversee 
     that area of the company?
       Stiller: I think consumers are looking for more of that 
     from companies. A lot of the people here are really motivated 
     to make a

[[Page 26280]]

     difference in the world. They feel it's the right thing to 
     do.
       Q: The economy is either in a recession or close to a 
     recession. Have you seen any indication of that in your 
     business? Or is coffee one of those products that consumers 
     regard as a necessity?
       Stiller: It is a necessity. People enjoy it. It's part of 
     their life. It's an energizing experience. It's reflective in 
     a sense. You sort of take a break for coffee. And lots of 
     times ideas come to you with that reflection. In troubled 
     times, people might drink more coffee. In the overall scheme 
     of things, there might be a little bit of a downturn but it 
     wouldn't be very significant.
       Q: You've been doing business in Vermont since 1981. Has 
     the state been a difficult place for your company to do 
     business?
       Stiller: I think it's been a great experience. The Vermont 
     name has added a lot (of value). I think the people we have 
     hired are wonderful. There is a real sense of integrity and a 
     hard work ethic. We haven't had too many problems with the 
     permitting process. We've always felt supported by state 
     government and other agencies within the government. The only 
     issue has been in the banking area where we have had trouble 
     getting the credit lines from local banks. We went down to 
     Boston years ago and have been banking out of the 
     state.

                          ____________________