* Brian Kelley brings needed product management skills - analysts
* Replaces Lawrence Blanford as competition intensifies
* Green Mountain shares rise as much as 11 percent
By Siddharth Cavale
Nov 20 (Reuters) - Green Mountain Coffee Roasters Inc named Coca-Cola Co executive Brian Kelley as CEO, betting on a product specialist to see it through intensifying competition that has eroded its share of the single-cup coffee market.
Kelley replaces Lawrence Blanford, who grew Green Mountain from a little-known Vermont-based coffee maker into one of the fastest-growing U.S. companies, but whose reputation has been diminished in the past year by sales misses and questions about the company’s business model and accounting practices.
Green Mountain’s shares, while up five-fold since Blanford took over from founder Robert Stiller in 2007, have fallen more than 66 percent since October 2011 when noted short-seller David Einhorn first cast doubts on the company’s sales figures and growth prospects.
The company’s shares rose as much as 11 percent to $30.40 in trading on the Nasdaq on Tuesday.
Kelley, 51, brings a wealth of experience to Green Mountain, especially in areas where the company has had problems, such as product and supply chain management, analysts said.
“We view the announcement favorably as Kelley’s operations experience at Coke is an area of considerable weakness at Green Mountain,” Stifel Nicolaus analyst Mark Astrachan said in a note.
Green Mountain’s growth prospects have moderated since some of the company’s patents related to the design of its K-Cup refills used in its Keurig brewer expired in September, paving the way for a wave of new competition from the likes of Starbucks Inc and Wal-Mart Inc.
The company, whose reputation took a knock when Stiller was stripped of his chairmanship in May over ill-timed stock sales, is also the target of a long-running Securities and Exchange Commission probe into accounting and revenue-recognition practices including dealings with distributor M. Block & Sons.
Blanford told Reuters last year that the company was confident in its business practices. Wall Street applauded in August when the company issued more detailed earnings forecasts that were considered to be more realistic.
SunTrust Robinson Humphrey analyst William Chappell Jr., said the new CEO offers the chance for a new lease of life for Green Mountain.
“While there have been new entrants (notably Starbucks) into the brewer category in the past few months, we believe that the market is still relatively underpenetrated,” said Chappell, who raised his rating on the stock to “buy” from “neutral”.
Kelley’s appointment, effective Dec. 3, ends an almost eight-month search since Blanford, 58, told the board in February that he planned to retire.
Lazard Capital analyst Matthew DiFrisco said Kelley’s background in bottling brings experience with national grocers, a fast-growing sales channel for Green Mountain.
Kelley will receive an annual base salary of $900,000 and signing bonus of $600,000, the company said in a regulatory filing. He is also eligible for an annual cash bonus with a target of 100 percent of his base salary.
The executive has been the chief product supply officer for Coca-Cola Refreshments, the unit that represents most of the company’s North American business, since October 2010. He was slated to take over as president of the unit next January.
Glen Walter will take over as president of Coca-Cola Refreshments, the company said in an internal memo.
John Sicher, editor of Beverage Digest, said that while Kelley was a talented executive, Walter would be a strong replacement. “Coke won’t miss a beat,” Sicher said.
Green Mountain shares were up 6 percent at $28.93 in afternoon trading. The stock hit a year high of $71.15 in February.