Starbucks turns up heat on coffee brewer market
NEW YORK (AP) - Starbucks Corp. is about to turn up the heat on the single-serve coffee market, and someone might get burned.
The Seattle-based company says it will start selling its new single-serve brewer online this week for $199. The machine will be rolled out in its ubiquitous cafes next month.
The arrival of the Verismo, which was announced earlier this year, comes amid intensifying competition in the piping hot market for single-serve brewers and the coffee pods they use.
The sector is currently dominated by Green Mountain Coffee Roasters Inc., which pioneered the market after its acquisition of the Keurig brand machine in 2006. But this month, the company's patent on its K-cup technology expired, which spawned copycat versions of coffee pods for Keurig machines.
Starbucks' decision to sell its own brewer comes less than a year after it struck a deal with Green Mountain to make coffee pods for Keurig machines. Now Starbucks is looking for a bigger piece of the pie.
In an interview with The Associated Press, Starbucks' CEO Howard Schultz said that the relationship with Green Mountain will continue and that Starbucks will still sell its pods for Keurig machines in cafes. He said that the Keurig machine is "a fantastic choice" for customers who want only brewed coffee.
The Verismo, however, uses a high-pressure system that can make lattes and other espresso-based drinks, as well as brewed coffee. Essentially, Starbucks has said its machine targets a different type of customer.
"They'll coexist and be complementary," Schulz said.
Investors aren't so certain. When Starbucks first announced its plans to roll out the Verismo in March, shares of Green Mountain plunged. Green Mountain's stock has lost 51 percent of its value since then. Starbucks' stock is little changed in the same period.
Green Mountain, which is based in Waterbury, Vt., has also been targeted by a Securities and Exchange Commission inquiry into its accounting methods. Last month, Green Mountain noted that its growth is slowing but that it still expects sales to increase by 15 to 20 percent next year.
The company noted in a statement that it has built a strong customer base for its Keurig system, which offers of 30 brands and more than 200 coffee, tea and other drinks.
"Since the early days of single-serve coffee, we have successfully competed against well-resourced companies," the statement said.
Schultz said Starbucks identified the single-serve coffee market as a "big opportunity" about two years ago. Since introducing its pods for the Keurig system last year, he said Starbucks has captured 15 percent of the market. And last year, he noted that the market for brewers and pods nearly tripled to $8 billion.
"It's rare that you identify a category as large as this that's growing," Schultz said.
In addition to the $199 Verismo, Starbucks will sell a $399 a model with a larger water tank and LED display that tells consumers when the machine needs to be cleaned. Green Mountain's Keurig brewers cost from $99 to $189.
By next week, the Verismo will be available in specialty stores such as Williams-Sonoma and Bed, Bath & Beyond. Specialty stores also sell other brewers, including the Tassimo by Kraft Foods Inc., which costs between $100 and $170. Starbucks had previously provided coffee discs for Tassimo, but has since ended that agreement.
Starbucks says it plans to tout its brewer with a multimillion-dollar marketing campaign. Schulz noted that customers will be able to buy both the machines and pods at its cafes.
"We're going to make it very, very easy for our customers," he said.
As for the name, "Verismo" is a word derived from a form of Italian opera. As The Wall Street Journal noted earlier this year, the operas usually end with someone's death.
The Seattle-based company says it will start selling its new single-serve brewer online this week for $199. The machine will be rolled out in its ubiquitous cafes next month.
The arrival of the Verismo, which was announced earlier this year, comes amid intensifying competition in the piping hot market for single-serve brewers and the coffee pods they use.
The sector is currently dominated by Green Mountain Coffee Roasters Inc., which pioneered the market after its acquisition of the Keurig brand machine in 2006. But this month, the company's patent on its K-cup technology expired, which spawned copycat versions of coffee pods for Keurig machines.
Starbucks' decision to sell its own brewer comes less than a year after it struck a deal with Green Mountain to make coffee pods for Keurig machines. Now Starbucks is looking for a bigger piece of the pie.
In an interview with The Associated Press, Starbucks' CEO Howard Schultz said that the relationship with Green Mountain will continue and that Starbucks will still sell its pods for Keurig machines in cafes. He said that the Keurig machine is "a fantastic choice" for customers who want only brewed coffee.
The Verismo, however, uses a high-pressure system that can make lattes and other espresso-based drinks, as well as brewed coffee. Essentially, Starbucks has said its machine targets a different type of customer.
"They'll coexist and be complementary," Schulz said.
Investors aren't so certain. When Starbucks first announced its plans to roll out the Verismo in March, shares of Green Mountain plunged. Green Mountain's stock has lost 51 percent of its value since then. Starbucks' stock is little changed in the same period.
Green Mountain, which is based in Waterbury, Vt., has also been targeted by a Securities and Exchange Commission inquiry into its accounting methods. Last month, Green Mountain noted that its growth is slowing but that it still expects sales to increase by 15 to 20 percent next year.
The company noted in a statement that it has built a strong customer base for its Keurig system, which offers of 30 brands and more than 200 coffee, tea and other drinks.
"Since the early days of single-serve coffee, we have successfully competed against well-resourced companies," the statement said.
Schultz said Starbucks identified the single-serve coffee market as a "big opportunity" about two years ago. Since introducing its pods for the Keurig system last year, he said Starbucks has captured 15 percent of the market. And last year, he noted that the market for brewers and pods nearly tripled to $8 billion.
"It's rare that you identify a category as large as this that's growing," Schultz said.
In addition to the $199 Verismo, Starbucks will sell a $399 a model with a larger water tank and LED display that tells consumers when the machine needs to be cleaned. Green Mountain's Keurig brewers cost from $99 to $189.
By next week, the Verismo will be available in specialty stores such as Williams-Sonoma and Bed, Bath & Beyond. Specialty stores also sell other brewers, including the Tassimo by Kraft Foods Inc., which costs between $100 and $170. Starbucks had previously provided coffee discs for Tassimo, but has since ended that agreement.
Starbucks says it plans to tout its brewer with a multimillion-dollar marketing campaign. Schulz noted that customers will be able to buy both the machines and pods at its cafes.
"We're going to make it very, very easy for our customers," he said.
As for the name, "Verismo" is a word derived from a form of Italian opera. As The Wall Street Journal noted earlier this year, the operas usually end with someone's death.
What's up with all the Starbucks haters who declare that their coffee is horrible? What motivates someone to come here and post numerous times that Starbucks' coffee is disgusting? I don't get it. It reminds me of how people talked in high school.Â
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We are talking about beans that get roasted. It's not rocket science. Starbucks coffee is great, nothing wrong at all with it.Â
Your just paying for the name, not a better product. I can't stand Starbucks overpriced disgusting coffee.
I find it very perplexing that the most expensive way ever devised to brew a cup of coffee is so popular. Think of oil companies selling a pre-packaged 5 gallon "pod" of gasoline that requires a special device to put it in the vehicle. I guess there really is a sucker born every minute.
 @Tooby Roosday Most expensive = Most convenient
I pay about .42 center per cup (cost of K-cup only)..
 @Stock Woodie Must be nice to be able to afford such convenience! You didn't factor in the cost of the special machine required. Hope you've got your retirement savings all set. For $3.99 you can get a single cup brewer (http://www.amazon.com/Melitta-Ready-Single-Coffee-Brewer/dp/B0014CVEH6) and a 12 ounce bag of Starbucks for about $8.00 and make about 40 cups of coffee. 40 cups of your "convenient" coffee comes to over $16.00 when you factor in the cost of the machine.
 @Tooby Roosday It's not about being lazy, it about "my" time. I choose to spend .50 cents a cup because the time/resources I save is beneficial to me. I realize the .50 only covers the cost of the K-cup, that's why I stated, "cost of K-cup only". $16 isn't much to me when you consider gas costs are $4.15/gallon. And yes, my retirement funds are doing quite well, as well as my mortgage and 3 cars (all paid off). People pick and choose their "conveniences". For instance, I have many neighbors that pay $75/month to have their lawn mowed. Personally, I mow my own lawn. I also don't have an iPhone or an expensive data plan. Pick and Choose.
 @Cupid Stunt We do live in a terribly lazy society don't we?
Save four bucks but have to deal with heating up the water and the mess? I'll spend the extra four bucks a month....Â
You could not pay me to drink that disgusting coffee.
 @sultan1978 I bet they could.
Good coffee for a buck Red box Best coffee machines for a dollor .There should be one next to every Red Box movie rental box but they cant be in a store if there is a Starbucks in the parking lot
Although I use to be a huge fan of Starbucks, I'm turned off on them now. I prefer to support the local noncorpoarate coffee houses now and feel the coffee is superior anyhow.Â
Nothing personal against starbucks, I'll spend a $1 and walk to Easy Street and get coffee instead
This is pure greed on steroids.
What is with all the SBUX haters?? If you don't like it, don't buy it or drink it, but my god don't forget to tell us all that SBUX is the spawn of the burnt coffee devil. That term is so 2006. Starbucks coffee isn't bad, you're heads are just stuck up your collective asses.Â
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Drink whatever you want, stop ragging on everything and get a life. Some people like SBUX, some don't, deal with it.
 @PacificNWRunner I sometimes think the people who complain about the burnt coffee taste are really only talking about french roast - all french roast tastes like burnt butthole. I can officially say this after trying coffee in France, multiple places and then a few days later going to Italy and having their coffee and being totally mindblown how a few hundred miles can make such a huge difference.
 @quidproquo Personally, I love the darkest of the dark roasts. I find that the people who complain about Starbucks all the time don't really like coffee as much as the cream and sugar that they put in it.Â
 @JeepRex  @caphillkid I can drink an Italian roast from almost anywhere just about black. I put a tablespoonish of half and half in and that's it.
 @caphillkid  @quidproquo The only reason why I put anything in my coffee from Starbucks is to help make the drink more palatable.
Now I can have the taste of burnt, over priced coffee at home! Great.
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I'll stick with my Keurig and keep filling My-K-Cup with great tasting, low price coffee.
I'll stick with my Mr Coffee with the thermo-pot and a jar of Folgers. And SYSCO Citavo at work!
 I thought this coffee trend ended 5 years ago...Not a fan of the pod coffee and their metallic aftertaste.
 @Ducky It's a K-cup, not a pod. Totally different.
 @Ducky I got one recently and I don't notice any metallic aftertaste.  Perhaps their brewing methods and technology has improved over the last 5 years.  Technology seems to do that.
Hey! It's great if you like the taste of burnt coffee!
Why do that use Italian names for everything ? Starbucks was started in Seattle and I think Howard Schultz was from NY.
 @SkaBob So you feel like you can justify paying more for their coffee.
... correction - environment - not what I had in earlier post. Dang inability to edit!!
Verismo - the death of.... somebody. Perhaps it will be the enviornment un-friendly pods.
 @Elaine2 Yes. Better K-cups would be nice. Maybe they could make them out of some kind of non-leaching cardboard so the whole thing is biodegradable.  If you take the time to cut the top off and pull out the grounds, you can recycle the plastic.
Thank Heaven for beautiful, fragrant, loose-leaf Assam tea and the dozens of ways of brewing it, from a single cup to a pot with friends and no little plastic K-Cups to spoil the environment with.
I'll stick with my 10 year old coffee pot and a can of Yuban.
I can't believe these type of coffemakers caught on. The coffee pods are overpriced, too much packaging to deal with, and they don't make a cup of coffee big enough in my opinion. Go figure. Â
 @Shelly Works out well for me and my wife as we maybe drink 2 cups/week.  If we were drinking 2 cups every morning or more I would go with a traditional coffee maker.
 @Shelly I'm with you, but I have a Keurig now and love it. The coffee pot was a pain because there was always cleanup (filter / pot / lid ) so I never made coffee at home, I went to a convenience store every morning for coffee. Now I ALWAYS make coffee at home, at under .50 cents a cup. Yes, the cups are small, but that's ok. I have to make at least 2 every morning, but that still beats driving to the store and spending $2, plus gas.
starbucks is horrible, nasty, coffee!!!
Mmmmm.... Staaarbuucks!
 @sultan1978 Great, don't drink it then, next.