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Starbucks' new one-cup coffee machine: Will customers buy it?
The ubiquitous coffee chain hopes to expand into your kitchen, offering a new home brewer that can re-create the company's signature lattes and espressos
 
Starbucks' Verismo 580 Brewer sells for $199, and ships with a box a Latte Pods.
Starbucks' Verismo 580 Brewer sells for $199, and ships with a box a Latte Pods.
starbucksstore.com

"A perfect Starbucks Latte at home. And at the push of a button." That's the promise Starbucks is making with Verismo, a one-cup brewing machine that went on sale this week. The machines, priced at $199 (or $399 for a deluxe version), will allow Starbucks fans to brew coffees, lattes, and espressos using single-serve coffee pods that can be purchased for $1 a pop (the pod for milk is an extra 60 cents). The move is considered a direct attack on Green Mountain Coffee Roasters, whose Keurig machine ($99-$189) is the dominant player in the growing market for one-cup brewers. Can Starbucks' Verismo make an impression with customers?

Yes. The market is wide open for more competition: Green Mountain "owns 90 percent of the U.S. single-cup market," says Steven Russolillo at The Wall Street Journal. We should cheer the arrival of a new brand, particularly because the Verismo's coffee-latte-espresso trifecta offers much more than Keurig's plain old coffee maker. Indeed, Green Mountain's share price is "getting battered," an indication that its days of dominance may be over.
"Green Mountain shares roasted by brewing competition"

No. Customers will stick with the machines they have: As Starbucks continues to branch out from its core coffee shop business, the Verismo is "very important to the company's image," says Seeking Alpha. But remember, the coffee-brewing industry provides a lot of options beyond one-cup brewers. No one should expect customers to "throw out their existing systems to buy the new Starbucks system," particularly since customers can buy Starbucks coffee pods to use in the Keurig machine.
"How will the new Starbucks Verismo system affect its stock price?"

And Green Mountain is a solid company: "Customers want a good coffee at an affordable price and Green Mountain has a reputation for this," says Trefis. Since there is no guarantee that the Verismo provides superior coffee, "customers may hesitate to switch," particularly if Starbucks is "too expensive." In addition, the Keurig accepts more than 200 different varieties of coffee, whereas the Verismo is a Starbucks exclusive. Bottom line? "Keurig's customers are satisfied."
"Why Starbucks' Verismo won't lead to the demise of Green Mountain"

 

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