Starbucks Enters Green Mountain's Single-Serve Coffee Market
Starbucks (NASDAQ: SBUX) will be releasing its single-serving coffee maker, the Verismo, later this week. Many investors may see the machine as a major threat to Green Mountain Coffee Roasters (NASDAQ: GMCR).
Starbucks' Verismo is a coffee maker that uses a high pressure system to make lattes and other espresso drinks. The machine will be available later this week for $199. There is also a deluxe version (for $399) that offers a larger water tank and an LED screen that tells users when it needs to be cleaned.
Howard Schultz, Starbucks' chief executive officer, was interviewed on CNBC about his company's new product on Thursday.
Early on in the questioning, Schultz was asked if he thought of Green Mountain as a competitor. Schultz described Green Mountain as a "partner," stating that “for the time being, Starbucks will be using Green Mountain to manufacture (our) k-cups.” Yet, he said that Starbucks “will become the leader in the space."
Schultz was also asked how Starbucks would go head to head in such a crowded market. He argued that “Starbucks has huge advantage over competitors because it has the ability to demonstrate its product in store.” With almost 13,000 locations in the U.S. alone, this storefront demonstration space will be critical for distribution.
Schultz also addressed Starbucks' recent dismal performance in Europe.
Schultz was positive, stating that “the worst is over for Starbucks Europe” and that the “company is beginning to see glimpses of optimism on the european strategy it is taking.” He also showed optimism in the company saying that Starbucks is seeing “more customers going into starbucks than any time in company history” -- perhaps a subtle clue to a forthcoming strong earnings report.
Starbucks traded up 1.42 percent Thursday around $50.82.
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