Starbucks Takes on Green Mountain Coffee with new single-cup machine

Starbucks Takes on Green Mountain Coffee with new single-cup machine
By Keurig Green Mountain, Inc. [Public domain], via Wikimedia Commons

Starbucks Takes on Green Mountain Coffee with new single-cup machine

Starbucks Corporation (NASDAQ:SBUX) announced that it would be selling single cup coffee machines that would allow people to brew coffee drinks.  The new coffee maker, Verismo, will go on sale online, high end specialty stores and at a select few Starbucks locations this fall.  As of right now, the cost of the machine is unknown.

This new coffee machine comes in response to Green Mountain Coffee Roasters Inc’s (NASDAQ:GMCR) popular Keurig machines, which Starbucks (NASDAQ:SBUX) currently has K-cup packs for.  However, as revealed by CEO, Howard Schultz, the Starbucks version will have the ability to make espresso drinks and other intricate coffee drinks.  Currently, the Keurig machines only brew coffee.

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Schultz also said in a statement that this coffee maker has nothing to do with Green Mountain.  The CEO said that the two companies can and will co-exist but Starbucks is “controlling our own destiny”.

Despite this, Green Mountain’s share tumbled 16% to $52.50 on the news while Starbucks posted a $1.64 increase to $52.01.

This addition to the Starbucks arsenal is part of a long term domination strategy that includes its Via Ready Brew packets which are intended for people who want instant coffee at home without buying a coffee machine.  Next, you have the K-cups which are for people who want just coffee at a basic level.  Then you have the heavy hitter, Verismo which is intended for a wide variety of coffee drinks.

This long term strategy is all about growth outside of the regular Starbucks café.  The company is trying to throw out a bunch of different ways that you can have your Starbucks coffee without making a trip to one of its retail locations.

There has been much speculation over the past year or so that Starbucks could end up taking over Green Mountain.  From what I have done, research wise, it appears that the deal would be tremendous for Starbucks because they would be in full control of the Keurig brand on top of its other products.  This would further secure Starbucks’ reign over at home brewing products.

Also Read: David Einhorn, CEO of Greenlight Capital, has long been short GMCR

Starbucks is on a roll.  Lead by great management, you know that they will continue to impress and move the company into a more dominating, growth oriented environment.  The stock is hitting all time highs right now, which if you are a momentum trader could be a trade worth looking at.  Starbucks is a winner over the long term.

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