Java Man

Waterbury is home to the largest seller of double-certified coffees organic and Fair Trade in the world.

by Virginia Lindaur Simmon

Robert Stiller leads Green Mountain Coffee Inc., the Waterbury company he founded, by keeping an eye on strategy, his head on business and his heart on the world.

In 1981, Robert Stiller had a cup of coffee in Waitsfield that was so good he bought the coffee shop. He wasn't even much of a coffee drinker at the time, he says, but the coffee roasted in that shop was so tasty, "I just knew it would be a great business and that people would be excited about that sort of perfect coffee experience." Green Mountain Coffee Roasters was born.

The timing couldn't have been better for Stiller to stop for that cup of joe. He was on the prowl for something to do, having recently sold a business. He had come to Vermont for the skiing and opted to settle here.

"I liked the idea that the product would be consumed, because if you do a great job, people will keep coming back to you. I feel if you provide the best quality and service in whatever you pursue, you're going to do well."

Green Mountain uses more than 100,000 square feet in several Waterbury buildings. Julie O'Keefe is account manager in Office Coffee Services.

Buying the coffee shop was by no means the first time this soft-spoken man made a life-changing decision and acted on it. He's a guy who thinks for himself.

After graduating from New York Military Academy, a prep school in Cornwall-on-Hudson, the Mount Vernon, N.Y., native entered the engineering school at Syracuse University. He soon transferred to Parsons College in Iowa, where he majored in business and accounting. It was a much easier shift that it might appear, says Stiller with a smile, because, at Syracuse, "all my friends were in liberal arts; I was always working and everyone else was always having a good time."

"He's a strategic thinker," says Bill Davis, a member of Green Mountain Coffee's board of directors, former CEO of Cabot Creamery and now president and CEO of Childtime Learning Centers, a publicly traded company based in Farmington Hills, Mich. "He's not in a hurry to make a decision, but once he's done his homework and done his research, then he makes a decision and definitely moves very quickly," Davis has been on the Green Mountain board since the company went public in 1993.

This talent for strategy has surfaced often in Stiller's life. Following college, he drifted a bit literally, not figuratively delivering boats for about a year, before accepting a position in the accounting division of Columbia University. He left two years later, in 1971, to found Robert Burton Associates, a company to develop and sell E-Z Wider products cigarette rolling paper and affiliated merchandise.

"I guess we were aware that people would use two pieces of paper quite often when they rolled," Stiller recalls, "and we said, 'Why not have a wider piece to begin with?' We had that concept and investigated the market size and the manufacturing and the paper converting did the whole nine yards," he adds. "By the time we sold the company, we were selling in a week's period enough paper to stretch from New York to California."

Green Mountain Coffee gives 5 percent of its pre-tax earnings to non-profit organizations or causes.

Robert Burton Associates was the company Stiller had sold not long before encountering that great cup of coffee in Waitsfield in '81. By the end of 1982, Stiller had opened another coffee shop, this one in the Winooski Mill, and moved production to Waterbury. "We started growing right then," he says.

In 1985, when the corporate offices were moved there, Waterbury became Green Mountain Coffee Roasters' headquarters. The square footage for all the company's operations has grown from an initial 45,000 to more than 100,000 square feet today.

The company's direction was profoundly affected by a seemingly small occurrence in 1989. "It was funny," says Stiller. "We were struggling had done some brainstorming on how we could reduce expenses; be more profitable. We got ideas from everybody, but there wasn't much energy around it. About the same time, a group of people wanted to form an environmental committee, and we said, 'Sure.'

It was through that committee, he says, that a lot of the expense reductions the company was attempting became energized, "like turning down the lights and heat to save the Earth. We redesigned some shipping boxes to reduce weight (which also reduces cost). They were looking for ways to save the environment, which also leads to expense reduction." Forming that committee is heralded as the beginning of the social responsibility projects for which the company is known.

This environmental sensitivity fueled, in 1990, the introduction of Rain Forest Nut coffee. "It was a natural evolution," says Stiller. "Rain Forest Nut could develop awareness for the rain forest depletion and at the same time, we were raising money through the sale of that coffee, which we gave to the Rainforest Alliance and Conservation International. We started developing sourcing criteria for coffee farmers that dealt with various social and environmental initiatives that different farms might follow, and that evolved over the years.

"We started sourcing more organic coffees when the quality of those coffees became great, and then when the Fair Trade certification came along, all the farms we were buying from on the organic coffees also qualified for Fair Trade, because we were paying premium prices for those coffees, and those farms were co-ops as well, which was one of the other criteria for Fair Trade."

Stiller says that, today, Green Mountain is "the largest supplier or seller of double-certified coffees (being organic and Fair Trade) and will probably surpass Equal Exchange, which is the largest supplier of Fair Trade coffee right now."

"The underlying foundation of Bob's leadership is his ability to set a strong foundation built on social responsibility, strategic planning and fundamentally strong economics," says Davis. "Very seldom do you get a combination like that. He understands how important economics are, but also how important the culture of the company's position in the state, country and world. Bob has been able to blend the two into a successful short-, medium- and long-term business. He's passionate, and also very compassionate," Davis adds. The company gives 5 percent of its pretax earnings to nonprofit organizations or causes.

"We were just down in Sen. [Patrick] Leahy's office in December," Stiller says. "I think we were the first company to sign a memo of understanding with US-AID to work in these coffee communities around the world, helping build sustainability and improving the conditions in these countries. The state's been great. We're working with the state on a project right now that has identified more than three-quarters of a million dollars of expense reductions through making environmental improvements in processes and materials.

In fiscal year 2002, Green Mountain realized an 8.8 percent increase in coffee pounds shipped, and gross profit as a percentage of sales improved to 43.2 percent. Here, coffee is gathered for shipping.

The state certainly provides its own form of magic, says Davis. "I'm biased a bit, but I think that it's very interesting that we've had such good success in the small state of Vermont in building very strong brands in the food business. It's not because it's a least-cost place to grow a business, and not because the infrastructure is really strong, but there's something inherently ... maybe it's the water, you never know." He chuckles.

"Look at Ben & Jerry's, Cabot, Green Mountain Coffee and a long list of others that have been successful," says Davis. "But Green Mountain is a company that should be a model for what a well-balanced company should look like, and Bob, he's always listened and been there for folks; and it's not just the community time off, not just the matching of donations to worthwhile causes, not just the really good benefit packages. He brings in outside speakers and goes well beyond what a normal company thinks is customary for its employees."

Davis mentions the employee stock-ownership program the company recently set up. "To really have the employees understand it, he brought in these financial classes so everybody in the company understands the economics of the business and how their involvement can make the economics ever better over time. I talked to a couple of employees, and they really thought that was neat."

The company's growth and practices have not gone unnoticed. In 2001, Green Mountain Coffee was named one of America's fastest-growing small companies by Forbes magazine, Business Week and Fortune. In 2002, the company made the Forbes "200 Best Small Companies in America" list for the third consecutive year.

Over the years, the company's focus has shifted away from its retail operations. 1996 saw the introduction of Certified Organic coffee, and a partnership was formed with Keurig Inc. to carry its one-cup brewing system. The following year, the company signed an exclusive agreement to provide Green Mountain Coffee to all corporately owned ExxonMobil convenience stores in the United States. This is the company's fastest-growing channel. In 1998, Stiller closed the GMCR's retail stores largely to the stores' managers to concentrate on the wholesale trade.

Setting Green Mountain apart is its wholesale operation, which services a large variety of establishments, from individual upscale restaurants to major supermarket chains. This exposes consumers to the brand through the day in a variety of contexts. It has the advantage of limiting the dependency of the company on a single distribution channel. Wholesale operations are coordinated from Waterbury and supplemented by regional distribution centers in Biddeford, Maine; Latham, N.Y.; Woburn, Mass.; Southington, Conn.; and Lakeland, Fla. The company also operates a direct-mail operation and e-commerce website.

In spite of a dip in the earnings expectations and a dip in stock price last year from $25 a share to just over $15 which occasioned a lowering of prospects for fiscal year 2003, Stiller predicts double-digit growth in 2003. "We have distinguished ourselves with our focus on both superior execution and being a responsible corporate citizen, and can now leverage these positions to competitive advantage," he says.

"The company had 20 percent compounded growth over a decade," says Davis, who claims the earnings dip came about from "the recession, 9/11 and the fact that a big part of our growth at that time was coming from the office coffee division, which went from 50 percent year-over-year to negative numbers. The strategic growth over time will continue to be robust.

"Bob's strategic vision is very clear," Davis continues. "We as a company don't make choices based on what the quarterly stock price is going to do; we make decisions on the long-term growth and profitable growth of the company. That's a basic flaw in the U.S. publicly traded markets, because it's forced leaders to take actions that are short-term oriented."

Recent partnerships have been announced, such as the company's 10-year agreement to be the exclusive roaster, seller and distributor of Newman's Own® Organics Fair Trade Certified coffees and a deal with Wild Oats Markets Inc., which will exclusively sell Green Mountain's double-certified organic and Fair Trade coffee in its 73 nationwide Wild Oats and Nature's stores' bulk coffee and food service. The company has also provided a zero percent–interest loan of $100,000 to EcoLogic Enterprise Ventures Inc. of Cambridge, Mass., to provide financing to small-scale coffee producers who grow some of the company's certified Fair Trade offerings.

Like many entrepreneurs, Stiller has experienced his share of challenges when it came to making the shift from founder to manager. "Let's say it was a learning experience," he says. "I've always been into self-development, so it was a part of the journey of growing a business. Certainly, I went back and forth over the years trying to understand how much direction is good and balancing that with empowering the people. Somebody made a great analogy: You want to frame the house, but let everyone else finish it."

Stiller places a premium on staying fit and enjoys tennis, running and skiing with his family. He and his wife, Christine, celebrated their 20th wedding anniversary in January. They have three children: a daughter, Julian, and sons David and Christian. "My daughter is a horse person," says Stiller, who confesses he's allergic to them. She was just long-listed for the Olympics."

There is little doubt that Stiller also remains passionate about what he's doing and continues to be willing to act on his principles.

"A lot of companies say, 'I'd like to give something, but I've got to be profitable first.' One of the things I try to convey to other businesses is that, by having a social and environmental mission, you are, I feel, guaranteed more success and the likelihood of better profitability, because the employees are going to be more engaged in the organization.

"Making money just goes so far, and people feel they're doing a greater good. They're more passionate and motivated and will go out of their way a little more. Customers, consumers, vendors, workers also appreciate that, and it creates a stronger likelihood of success.

Originally published in February 2003 Business People-Vermont