Money can’t buy happiness but it can buy coffee which is the same thing.
Jack A. Bass ( The Real Mr. Coffee )
Starbucks (SBUX : NASDAQ : US$51.14)
Starbucks is setting up to battle with its new Verismo coffee and espresso makers that could pose a threat to brewers from Green Mountain Coffee Roasters and Nestle , the dominant players in the $8 billion single-serve coffee market.
The basic Verismo is available in two models and will sell for $199 for the basic version and $399 for a larger version, with temperature controls and self-cleaning. The prices were in line with analysts’ expectations. According to the latest press release, retail sales are set to begin in October.
This presents a pretty big threat to Green Mountain’s Keurig, which controls one-cup coffee brewers control more than three-quarters of the U.S. market. Meanwhile Nestle’s Nespresso espresso makers hold a 35% share globally, with a heavy concentration in Europe.Green Mountain’s new Keurig Vue coffee brewer sells for around $250, while Nespresso machines can cost anywhere from $130 to $700.
A Wall Street Analyst points out that this announcement does not include anything new, rather he believes that Green Mountain was under pressure because the market was not expecting Starbuck’s to meet its October launch target.
That said, Starbucks appears to be a very real threat as it already has a 15% of the K-cup market, via a partnership with Green Mountain under which Starbucks provides coffee-filled K-cups for use in Green Mountain’s Keurig machines .