Although it has been expected for a long time, today’s introduction of the new Verismo single-serve coffee maker from Starbucks Corp. (NASDAQ: SBUX) is hitting shares of Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR). The early warnings that the new machine was coming have diluted the effect somewhat — Green Mountain shares really tanked in May after Starbucks announced the Verismo.
Citing the company’s “passion and commitment” to offering customers “exceptional coffee and espresso beverages,” CEO Howard Schultz said:
We are applying that passion and commitment, once again, to the fastest growing segment of the coffee market, the multi-billion-dollar premium single cup segment, with the introduction of a breakthrough at-home Starbucks® coffee experience that is second to none. What we are bringing to market today has been impossible until now.
Unlike its competitors Green Mountain’s Keurig machines and Nestle’s Nespresso system, the Starbucks machine is capable of brewing both single-cup coffee and espresso. The new Verismo system will sell for $199, or $399 in a souped-up version. The newest Keurig coffee makers sell for around $250, and the Nespresso machines range in cost from $130 to $700.
Starbucks will continue its partnership with Green Mountain, supplying K-cups for the Keurig systems.
The single-cup coffee market is the fastest growing part of the coffee business and is worth about $8 billion globally, according to the Starbucks announcement.
Green Mountain’s shares are down more than 4% in premarket trading this morning at $29.35 in a 52-week range of $17.11 to $113.50.
Paul Ausick
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