Now You Can Be Pretentious Too: Starbucks Opens New Location, Your Home

by Thom Forbes, Sep 20, 2012, 8:10 AM

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Wannabe home baristas have a new toy to play with. Following through on an announcement made in March, Starbuck’s CEO Howard Schultz tells the New York Times’ Stephanie Strom that the company’s R&D department has “cracked the code on being able to create a latte using real milk” and the result is two single-serve machines dubbed the Verismo.

One is available at verismo.com this morning in silver, black, burgundy or champagne for $199; another with a larger water tank will be $399. Shultz claims the Verismo is the only machine out there that will produce a cup of joe “just like we make it in our stores.”

The “extra glitzy” Verismo, as USA Today’s Bruce Horovitz puts it, will be available in stores such as Williams-Sonoma, Sur la Table and Bed, Bath & Beyond next week. “Even then, the real profits will come from selling the single-cup coffee pods at about $12 for a dozen,” he writes. “And eight Espresso pods along with eight milk pods for about the same price.”

AP writer Candace Choi ledes with the brewing battle between Starbucks and one of its partners: “Starbucks is about to turn up the heat on the single-serve coffee market, and someone might get burned.”

Specifically, that someone is Green Mountain Coffee Roasters, which makes the Keurig brand machine. Starbucks has been making coffee pods for Keurig’s machine for a year. Schultz tells Choi that the Keurig “is a fantastic choice" for customers who want only brewed coffee and that it and the Verismo will "coexist and be complementary."

Indeed, verismo.com is actually just a section of the Starbucks Store site, which sells a wide variety of coffee makers from manufacturers including Baratza, Bodum, Bunn, Krups, Saeco and Technivorm.

Plus, the Verismo has limited appeal in “a nation of drip-coffee lovers,” as the Wall Street Journal’s Julie Jargon puts it. Only 4% of coffee brewers purchased in the U.S. were espresso makers last year, according to NPD Group. But a couple of analysts tell her that espresso is where the action is.

"If you look at the proliferation of offerings in the coffee market in the U.S. over the past 15 years -- both in home and out of home -- most of the innovation and new offerings have come in espresso and espresso-based beverages and recipes," says Nespresso USA president Frederic Levy.

For his part, Green Mountain CEO Larry Blanford has predicted that there will be 35 million households in the U.S. with single-serve coffee machines by 2016 and he expects his company to “continue to dominate the market,” as Reuters Martine Geller reported last month.

"This is a big bet we're making," Schultz tells Jargon, revealing that the company will launch a multimillion-dollar ad campaign to promote Verismo, a word that refers to a style of Italian opera.

Mashable’s Kenneth Rosen reports that the Verismo “was a welcome addition to the Keurig we have here” although the “three buttons --  one for espresso/rinse, one for brewed coffee and one for milk -- posed a tough choice for some techies who forego manuals.”

In other Starbucks news, “the debut of Verismo … collided with consumer outcry over planned changes to a rewards program that Starbucks announced this week,” Strom reports. “Customers posted cranky comments on the company’s blog, Facebook page and other social media about its decision to end free syrups and soy additions, even though Starbucks made an effort to improve some terms of the program….”

Business Insider’s Kim Bhasin breaks down the changes for Gold Rewards members that will be effective Oct. 16.

A petition on Change.org asks Starbucks to “Keep Free Soy and Syrup For Reward Card Members.” It had “reached 1,500 signatures” as of this morning. Strom points out that a similar petition “persuaded Starbucks to replace a food coloring it used in strawberry drinks that contained crushed insects with one that was vegetable-based.”

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