When it comes to people’s weakness for coffee, Starbucks is by far the biggest winner in the U.S. market. However, as its presence in international markets, such as Europe, has been weaker due to financial turmoil, Starbucks is looking for ways to be more effective and popular as brand. As a result, the company has decided to launch its own brewer. The news sent rippling waves throughout the U.S. coffee market.
Basically, Starbucks’ plan is to launch its own brewer and coffee machine brand that will help set it apart from Keurig and Green Mountain Coffee Roasters. The new rival in the coffee market will be known under the brand Verismo and will be marketed as “Verismo system by Starbucks”.
The first to be hit by Starbucks’ recent decision is Green Mountain Coffee Roasters, one of the biggest names in the single-serve coffee machines U.S. market. Just moments after Starbucks announced its intention to promote its own branded brewer and coffee machine, the markets took the shook and caused Green Mountain’s shares to plunge by 24 percent.
Green Mountain recovered the drop in markets, after Starbucks had a conference mentioning that the two companies will continue their partnership involving K-cups. These are single serving coffee packets that are compatible with Green Mountain’s Keurig brewer for home use.
Hedge fund manager David Einhorn pointed that Starbucks’s new project is just part of the hurdles Green Mountain will have to face. “With Green Mountain’s patents expiring this fall, Starbucks’ entry is part of the competitive onslaught hitting Green Mountain” he said.
The potential of the single cup coffee market is so huge, analysts are sure it will attract more players in the following months. Sara Lee is just one of the names that have been hinting recently similar plans. Nestle is already present in the market with its SA’s machines and Starbucks’ new project is a direct competitor.
So far, Green Mountain doesn’t seem to be prepared for the changes the U.S. coffee market is currently going through. Last month the company launched a minor attempt to strengthen its position in the market as it announced it plans to sell premium Keurig brewers under the brand “Vue”. Priced at $250, Green Mountain’s premium line of brewers might take the heat from Starbucks’ upcoming Verismo.