Friendly rivals Green Mountain Coffee Roasters, based in Waterbury, Vermont, and Starbucks, based in Seattle, may see that relationship change profoundly. Starbucks Coffee Company (NASDAQ:SBUX) announced Thursday its first foray into the at-home premium single cup machine, which it calls the Verismo system by Starbucks. Green Mountain Coffee Roasters' Keurig machines have been the standard in the industry for single-cup servings through its K-Cups. Now Starbucks is challenging Green Mountain Coffee on the individual serving machine. On the announcement, Starbucks shares ($52.18, up $1.81 +3.59%) increased while GMCR's ($52.99, down $9.41 or -15.08%)plummeted in overnight trading; it finished Friday at $52.59.
GMCR announced earlier this year that it would release a new, low-pressure system intended to enhance traditional brewing, while working with an Italian company on a new high-pressure system. Starbucks and Green Mountain Coffee already have contracts for Starbucks to package its coffee in Keurig K-Cups for the existing coffee makers.
"We believe Starbucks to be a very satisfied participant in the Keurig K-Cup system, having frequently communicated its ongoing support of the Keurig K-Cup platform," said Lawrence J Blanford, GMCR's President and CEO. "The two companies continue to collaborate with each other in the low-pressure Keurig Single Cup Brewing system in North America. As a leader and one of the few long-time participants in single-cup premium coffee brewing, we agree that there also is opportunity for complementary high-pressure espresso-based systems, as evident by our joint development work with Luigi Lavazza S.p.A. on a high-pressure capsule-based espresso system targeting North American consumers."
GMCR said last summer that these co-developed machines would complement GMCR’s line of Keurig single-cup coffee brewers. GMCR further stated that it does not anticipate that any of these co-developed machines and/or capsules will be available for the marketplace prior to GMCR’s fiscal year 2013, which begins in September.
In a statement released Friday morning, GMCR said: "With more than 25 brands and over 200 varieties of coffee, tea, hot cocoa, iced, fruit-based and frothy café style beverages, the Keurig Single Cup Brewing system continues to transform how North Americans brew and enjoy their coffee and other beverages at home and in the workplace. Consumers are passionate about their Keurig brewers, and with the recent introduction of our new Vue brewer we have never been more excited about our opportunity to further Keurig Single Cup Brewer adoption and to provide consumers new beverage choices and more occasions to brew what they love the way they love it.
"We look forward to continuing to grow the single-serve filtered-coffee opportunity in North America with our Keurig system partners, including Starbucks."
The Starbucks Verismo system crafts both Starbucks-quality espresso beverages, from lattes to americanos, and brewed coffee one cup at a time. It will be available next fall.
Starbucks' system combines its signature Espresso Roast and drink recipes with precise Swiss engineering and a patent-pending high pressure extraction capability, giving customers the ability to create Starbucks-quality beverages. Through a strategic relationship with privately-held, Germany-based Krueger GmbH & Co. KG, Starbucks will market and sell the premium Verismo system by Starbucks and Starbucks-sourced 100 percent arabicacoffee and milk pods starting this fall.
The Keurig Single Cup Brewing system has been designed to deliver a premium, filtered-coffee taste profile directly in line with the sweet spot of the majority of North American coffee consumers. Its Keurig K-Cup system and new Vue Single Cup brewers use low pressure to extract maximum flavor and taste from ground and filtered specialty Arabica coffee, producing an excellent cup of fresh-brewed coffee at the push of a button in a matter of seconds. Espresso systems generally use high pressure and high temperature to produce a more intense taste profile, frequently used for mixing with milk in North America.
‘The premium single-cup segment is the fastest-growing business within the global coffee industry,’ said Howard Schultz, Starbucks chairman, president and CEO. ‘We have long believed that the biggest prize within the segment is a high-pressure system that would give us the opportunity to deliver Starbucks-quality espresso beverages at home and at work for customers who desire the Starbucks® espresso experience outside of our stores.’
Just in time for the upcoming holiday season, Verismo system by Starbucks will be sold online and at select Starbucks retail stores, as well as specialty retailers across the US, Canada, and in select international markets. Espresso and brewed coffee pods will initially be available in a full range of Starbucks roast spectrums, along with a variety of milk pods.
‘The combination of Starbucks coffee authority and our technology and development expertise will enable Starbucks to deliver the quality and taste expectations in the cup that millions of people all over the world have come to expect from Starbucks,’ said Marc Krueger, member of the Krueger GmbH & Co. KG management board.
The introduction of Verismo system by Starbucks advances Starbucks plan to offer a full portfolio of premium single cup alternatives and experiences to customers. Starbucks entered the premium single-cup market with Starbucks VIA Ready Brew instant coffee in 2009 and significantly extended its footprint in the space this past year with its ground-breaking relationship with Green Mountain Coffee Roasters to provide Starbucks K-Cup packs beginning last fall. In the first eight weeks following that launch, Starbucks shipped more than 100 million Starbucks K-Cup packs, and the Starbucks K-Cup business continues to accelerate.
‘We now have the opportunity to reach millions of customers who have been looking and waiting for a uniquely Starbucks solution in the fast-growing premium single cup coffee market with a coffee quality, taste, roast variety and design sensibility that is consistent with Starbucks brand and reputation,’ said Jeff Hansberry, president, Channel Development for Starbucks.
A webcast on the announcement will be available at Starbucks Newsroom athttp://news.starbucks.com.
About Green Mountain Coffee Roasters, Inc.
As a leader in specialty coffee and coffee makers, Green Mountain Coffee Roasters, Inc. (GMCR) (NASDAQ: GMCR), is recognized for its award-winning coffees, innovative Keurig® Single Cup brewing technology, and socially responsible business practices. GMCR supports local and global communities by offsetting 100% of its direct greenhouse gas emissions, investing in sustainably-grown coffee, and donating at least five percent of its pre-tax profits to social and environmental projects.
GMCR routinely posts information that may be of importance to investors in the Investor Relations section of its website, including news releases and its complete financial statements, as filed with the SEC. The Company encourages investors to consult this section of its website regularly for important information and news. Additionally, by subscribing to the Company's automatic email news release delivery, individuals can receive news directly from GMCR as it is released.
About Starbucks Corporation
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest-qualityarabicacoffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the uniqueStarbucks Experienceto life for every customer through every cup. To share in the experience, please visit us in our stores or online atwww.starbucks.com.
Keurig, the Cup and Star design, Keurig Brewed and K-Cup are registered trademarks of Keurig, Inc. used with permission. K-Cup® packs for use in the Keurig® Brewing Systems.
SEATTLE, March 8, 2012, Waterbury, VT, March 9, 2012