Starbucks Deal Adds Jolt To Single-Serve Coffee

by , Mar 9, 2012, 7:48 AM
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Who knew there was a huge market out there for yet another way to make, literally, a simple cup of coffee? The news that Starbucks is “pushing into the single-serve coffee market in a bigger way with a brewing machine of its own” sent Green Mountain Coffee Roasters stock tumbling in after-hours trading we learn from the Wall Street Journal’s Julie Jargon this morning –- further evidence that the single-serve phenomenon is not just a one-shot Johnny-come-lately.

Green Mountain makes the seemingly ubiquitous-from-nowhere Keurig single-cup brewers. Starbucks and Green Mountain made a deal last March to sell Starbucks coffee and Tazo tea for Keurig machines at wholesale clubs, drugstores and supermarkets in North America, quieting at the time “speculation that Starbucks would debut its own single-serving brewer,” Reuters’ Lisa Baertlein and Phil Wahba reported.

But Starbucks announced yesterday that it has developed a single-serve system called Verismo with the German company Krüger GmbH. The Verismo is focused on high-pressure, espresso drinks and will compete primarily with Nestle SA’s machines, Starbucks’ CEO Howard Schultz said during a conference call.

“Keurig’s low-pressure brewers and Kraft Foods Inc.’s Tassimo machines are the only ones ‘in which Starbucks can participate in North America,’ Suzanne DuLong, a Green Mountain spokeswoman, said in an e-mailed statement,” reports Bloomberg News’ Leslie Patton on Boston.com. “We believe Starbucks is a very happy partner within the Keurig K-Cup platform.”

“The relationship with Green Mountain is as solid today as when we began," Schultz concurred. "We believe the category is still in its nascent stage. We have an opportunity to launch the Verismo system but also to support Green Mountain."

Over the years, I’ve used everything from a battered percolator to a Farberware electric pot to Joltin’ Joe Dimaggio’s Mr. Coffee to a French Press to Moka pots (we currently have two sizes) to a vacuum contraption to Melitta pour-overs to a Viet Nam coffee maker to grind-and-brew machines (and don’t get me started on how many stand-alone grinders have left the counter littered with free-radical grounds over the years.)

One of the better methods of brewing great java was taught to me by a Colombian friend whose family had a coffee plantation. It’s a Puerto Rico Coffee Sock, which I see inflation has pushed to $2.25 US; EUR 1.80. Its drawbacks -- and they are major when you alight from slumber at 5 a.m. -- are that you can’t set a timer and it requires that one still-dozing hand hold the handle while the other pours the hot water over some neuron-stirring El Pico.

Have you seen the housewares department at Kohl’s lately? Half of it seems to be taken up with non-stick, non-Teflon (which is said to be perfectly safe, BTW) cookware; the other half with Keurigs and its cousins. Where did they all come from?

“[Keurig] was founded by coffee lovers who wanted to enjoy the same quality and consistency of coffee enjoyed in their favorite coffee houses,” according to a history on coffee.org. “From a single question, ‘Why do we make an entire pot of coffee when we drink only a cup at a time?” came the Keurig K-Pod concept, which made its debut in 1998. The brewing system touted that it could brew a perfect cup of coffee in less than a minute and the Keurig coffee makers certainly deliver on that promise.”

The first Keurig at-home brewer, the pricey B100, was launched in 2003. Green Mountain Coffee Roasters, which acquired Keurig in 2006, was launched in 1981 “as a small café in rural Vermont …,” according to the company website. “Demand quickly grew beyond the walls of the café, with local restaurants and inns asking the company to supply them as well.”

Single-serve coffee is now a $4 billion-a-year global market with U.S. growing rapidly from its current base of about $100 million, according to RBC Capital Markets, IB Times reported last March. “The premium single-cup segment is the fastest-growing business within the global coffee industry,” Schultz said in a statement yesterday.

While I mull what we’d have to dispose of to squeeze a Verismo onto counters or into cabinets already bulging with old coffee-making devices and spare decanters, I think I’ll head down to the Hastings Station Café and get a cup of cappuccino before I start frothing on machines that froth.

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