Are Starbucks and Kraft Breaking Up?
We've been following the public battle over the Starbucks coffee business at grocery and perhaps single serve coffee T-Discs for the past few weeks, and it doesn't look good. We're unsure if the agreement Starbucks wants to end - a $500 million dollar business Kraft and Starbucks have grown over the past 10 years will include Tassimo T-Discs for Seattle's Best and Starbucks brand coffees, or just focus on Kraft not being able to distribute Starbucks whole bean and ground coffees.
It would seem if Kraft and Starbucks break up the T-Discs would have to go as well, and is this because Starbucks is going to make some kind of single serve coffee brewer using VIA as a base? Who knows, but this potentially disappointing news for consumers of the Tassimo brewing system.
From the Chicago Tribune:
While Starbucks seems bent on breaking up with Kraft, which has distributed its coffee in grocery stores for 12 years, it's unlikely to affect consumers. But the move may cost Starbucks some big bucks. Behind-the-scenes discussions between the companies percolated into public dissonance during earnings calls by Kraft Foods Inc. and Starbucks Corp. on Thursday and culminated with a string of company announcements that seemed to be setting the stage for litigation.
Starbucks desire to break away from Kraft seems to mark a new era for the company. Over the past decade, the coffee chain's agreements with companies like Kraft (bagged coffee) and PepsiCo Inc. (bottled Frappuccino beverages) served as Starbucks' most visible advertising. For consumers who lived in areas without Starbucks cafes, the packaged and bottled versions of its coffee, ice cream and chocolates served as a regular reminder of the brand.
Whatever happens, we'll keep you posted on what we find out regarding Tassimo and the continued presence of Starbucks and Seattle's Best on the platform.
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Posted by Jay Brewer at November 12, 2010 8:13 AM
Yeah, it's over Johnny. Starbucks is pulling out, one way or another. This will almost assuredely mean T-Discs are gone, if not the Tassimo system as a whole. Lots of anaylsts are recommending that is Kraft loses Starbucks, they may as well, divest Maxwell House. That will leave no coffee business for them anymore, at which point making a coffee brewer is pointless.
I personally am selling my Tassimo and getting Nespresso. Good luck Kraft.