Starbucks Corp said it will launch its own single-cup coffee and espresso drink machine later this year, putting it in direct competition with partner Green Mountain Coffee Roasters Inc , seller of the popular Keurig home brewers.
Shares of Green Mountain plunged as much as 24 percent in after-hours trade, but regained some ground after Starbucks said on a conference call that it would continue to supply Green Mountain with Starbucks-branded single-serve coffee pods called K-cups. Starbucks shares rose 3 percent to $51.87.
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The world’s biggest coffee chain, whose “Verismo system by Starbucks” will make both brewed coffee and espresso beverages such as lattes, is the latest player to beef up its presence in the fast-growing single-serve coffee market dominated by Green Mountain’s Keurig brewer in the United States and Nestle SA around the world.
“With Green Mountain’s patents expiring this fall, Starbucks’ entry is part of the competitive onslaught hitting Green Mountain,” said hedge fund manager David Einhorn, who has been one of the most outspoken critics of Green Mountain.
Green Mountain did not immediately respond to requests for comment on the Starbucks announcement.
Companies like Sara Lee and Nestle have recently indicated they are ready to ramp up their presence in single-cup coffee. Even the world’s largest retailer Wal-Mart Stores Inc said it would add the relatively unknown Esio Beverage System to its shelves.