February 15, 2011

Starbucks Plans Single Serve Coffee Business of iPhone Proportions

Starbucks Corp on Sunday said it plans to announce a new product for the single-serve market "in the near future." We've long expected Starbucks, which also sells Via instant coffee packets, to make a more aggressive move into the small, but fast-growing single-cup brewing segment.

Why now? Starbucks and Kraft are breaking up on March 1, with a termination of an agreement by which it provides coffee discs for Kraft Foods Inc's Tassimo one-cup home brewer. We think Starbucks will begin providing coffee for the Keurig system, but you never know. Could they be creating their own new single serve coffee format that isn't VIA? We think that's unlikely given they won't want to cannibalize their own sales of VIA which has been doing better in recent months.

And what's the opportunity for Starbucks? Most Starbucks customers do not now have a single-serve machine and the company intends to transform the market the way Apple Inc's iPhone rocked the cell phone business. We hope that means a single serve coffee machine sold through Starbucks stores, and many options for coffee flavors or "coffee apps" to choose from. Whatever they do they better do it fast before they're left behind the single serve coffee future.

Via msnbc.com

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Posted by Jay Brewer at February 15, 2011 7:28 AM

Recent Comments

I say their smartest move would be to enter into a short-term partnership with Keurig and license their coffee through GMCR. The reason I say "short-term" is due to the bad experience they had with Kraft... kinda makes me wonder how willing they are to jump back into the single serve coffee market once they kill off T-Disc production/licensing. They've already partnered with Bodum to make a VIA kettle/brewer, so hopefully they won't come out with another lame idea like that (how many ways can you re-invent a hot water kettle?). Time will tell, but hey... at least we might be in for one doozy of a Starbucks T-Disc firesale in the coming months :-P

Posted by: SH at February 15, 2011 6:00 PM

This makes me wonder whether or not Starbucks will still produce T-Discs for the Tassimo in addition to its new plans, or whether they'll be pulling the plug on T-Discs altogether.

Posted by: Steve at February 15, 2011 9:23 AM