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The Three-Peat A Vermont coffee wholesaler is one of only four companies that have made the list three years in a row.
By Ellyn Spragins

(FORTUNE Small Business) – GREEN MOUNTAIN COFFEE No. 42

There's something to be said for being in the right place at the right time. Consider the coffee business, which has expanded like few others over the past 25 years. Since 1979, U.S. spending on upscale beans--like French roast and hazelnut, or basically everything above Folgers--has increased nearly fourfold, while the number of specialty-coffee retailers has grown 900%, to 2,500. Yet even in that context, the growth of Green Mountain Coffee Roasters has been impressive: It's one of just four companies to make our Fastest-Growing list for the third straight year, along with EPIQ Systems (No. 5), Dynacq International (No. 8), and TALX (No. 50).

Green Mountain's mojo stems partly from knowing when to walk away from a fight. By the mid-1990s the company had opened a dozen retail coffee shops, mostly in the Northeast, that faced stiff competition from other chains. So in 1998 founder Bob Stiller, an untwitchy 59-year-old whose previous entrepreneurial venture manufactured EZ Wider cigarette papers, quit the retail business and focused instead on selling his beans wholesale to convenience stores and company offices. So far it's working--revenue has gone up 79% since then.

That rapid expansion has forced the company to make some technological changes just to keep up. Jim Prevo, chief information officer, was named one of the country's top CIOs in 2000 by Computer World magazine because of his foresight in upgrading Green Mountain's outdated systems. He began replacing a patchwork of software with PeopleSoft applications back in 1997, when Green Mountain had only $38 million in sales. The company's human resources, financial, supply-chain, and other systems are now so well integrated that it didn't need to take a physical inventory of its six warehouses this year--the first time ever. "The technology saves us time and gives us great ability to pack orders efficiently," says Prevo. "It also saves us a lot of money because we don't have to manage multiple streams of incompatible data."

That said, Stiller takes steps to keep the profit motive in perspective. About 5% of operating profits are given to charities and nonprofits, many of which help coffee farmers. Last year, for example, Green Mountain built drying patios for La Voz, a farmers' cooperative in Guatemala, enabling growers to wash off membrane and pulp without getting their coffee beans dirty. "We teach them how to taste, judge, and process coffee so that they can improve their product and get more money for it," says Stiller.

It's a touchy-feely strategy, but it results in more than just a warm glow. One of the company's fastest-growing product categories right now is called Fair Trade coffee, a designation guaranteeing that farmers received fair compensation for their beans rather than the rock-bottom prices that often prevail in world markets. Consumers like knowing that their daily cup of joe isn't keeping farmers in poverty on the other side of the globe. While Fair Trade constituted just 2% of total revenue two years ago, it now accounts for about 10%.

Next up, Stiller will try to expand beyond the corporate business and into products for the home. Green Mountain currently sells single-serving packages that work with a heavy-duty Keurig coffee brewer used in the kitchens of big companies. (It is one of six companies that are licensed to package coffee for the machine; after closing that deal, Green Mountain saw office sales go up nearly 65% in one year.) Now Keurig, which is 42% owned by Green Mountain, is poised to introduce a $249.95 single-serving machine that is designed for home kitchens. French vanilla for me--and rain-forest nut for you, honey?

If single-serving machines become the next hot kitchen accessory, Green Mountain may be able to ratchet up its consumer presence. Right now only about 30% of its sales are for at-home brewing, leaving plenty of room for growth. Keurig, based in Wakefield, Mass., sees lots of potential in the office market too. While a coffeemaker of some sort lurks in nearly every office, only about 4% of them are single-cup brewers. "I really feel we've only scratched the surface with Keurig," says Stiller. That could just be the coffee talking. But with Green Mountain's track record, we doubt it.