Keurig Green Mountain

Starbucks Takes on Green Mountain Coffee with new single-cup machine

Starbucks Takes on Green Mountain Coffee with new single-cup machine

Starbucks Corporation (NASDAQ:SBUX) announced that it would be selling single cup coffee machines that would allow people to brew coffee drinks.  The new coffee maker, Verismo, will go on sale online, high end specialty stores and at a select few Starbucks locations this fall.  As of right now, the cost of the machine is unknown.

This new coffee machine comes in response to Green Mountain Coffee Roasters Inc’s (NASDAQ:GMCR) popular Keurig machines, which Starbucks (NASDAQ:SBUX) currently has K-cup packs for.  However, as revealed by CEO, Howard Schultz, the Starbucks version will have the ability to make espresso drinks and other intricate coffee drinks.  Currently, the Keurig machines only brew coffee.

Schultz also said in a statement that this coffee maker has nothing to do with Green Mountain.  The CEO said that the two companies can and will co-exist but Starbucks is “controlling our own destiny”.

Despite this, Green Mountain’s share tumbled 16% to $52.50 on the news while Starbucks posted a $1.64 increase to $52.01.

This addition to the Starbucks arsenal is part of a long term domination strategy that includes its Via Ready Brew packets which are intended for people who want instant coffee at home without buying a coffee machine.  Next, you have the K-cups which are for people who want just coffee at a basic level.  Then you have the heavy hitter, Verismo which is intended for a wide variety of coffee drinks.

This long term strategy is all about growth outside of the regular Starbucks café.  The company is trying to throw out a bunch of different ways that you can have your Starbucks coffee without making a trip to one of its retail locations.

There has been much speculation over the past year or so that Starbucks could end up taking over Green Mountain.  From what I have done, research wise, it appears that the deal would be tremendous for Starbucks because they would be in full control of the Keurig brand on top of its other products.  This would further secure Starbucks’ reign over at home brewing products.

Also Read: David Einhorn, CEO of Greenlight Capital, has long been short GMCR

Starbucks is on a roll.  Lead by great management, you know that they will continue to impress and move the company into a more dominating, growth oriented environment.  The stock is hitting all time highs right now, which if you are a momentum trader could be a trade worth looking at.  Starbucks is a winner over the long term.

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 4/30/2020 or after the next 40 subscribers take advantage whichever comes first – please do not share this discount with others

 

0