(PEET) Peet’s Coffee & Tea Introduces Light Freddo

The coffee roaster and retailer Peet’s Coffee & Tea Inc. (PEET) has launched a new blended iced coffee beverage called – Light Freddo.

As the name says, the new Light Freddos of Peet’s will have 50% lower calories than the regular Freddos. Despite that, Peet’s did not compromise on the richness, creaminess and smoothness of Freddos for which the Freddos are popular. Moreover, the new version offers the same taste and coffee flavor of the regular Freddos.

Further, the rates for Peet’s medium Light and Regular Freddos will only be for $3 each on the days of July 8, 15, 22, and 29. Also, they are made of the highest-quality ingredients and craftsmanship and are available at all Peet’s retail locations.

In addition, Peet’s will continue to have its summer Freddo Friday tradition throughout the month of July in all Peet’s locations, excluding licensed partners.

Peet’s reported its first quarter 2011 diluted earnings per share of 41 cents, up 58% from the prior year quarter of 26 cents. It also surpassed the Zacks Consensus Estimate of 34 cents by 20.58%.

However, Peet’s lowered its full-year 2011 diluted earnings per share guidance by 10 cents to the range of $1.43 to $1.50 range on the back of a significant rise in cost of coffee during the last three months.

We are encouraged by the premium coffee industry’s strong growth over the past decade and the fact that Peet’s is targeting the growing consumer demand for the coffee comes as a further fillip. The company’s two competitive advantages are its quality and the variety and Peet’s vertically integrated business model that allows it to control the quality of coffee at all stages.

However, the company faces fierce competition especially in the specialty coffee category. Major peers for the company include Coca-Cola Enterprises Inc. (CCE) and Starbucks Corporation (SBUX).

We currently have a Zacks #2 Rank for Peet’s, which translates into a Buy rating on a short-term basis. On a longer term, we have a Neutral recommendation.

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