Seattle based coffee giant Starbucks has begun selling a single-serve coffeemaker, creating a challenge to Green Mountain’s Keurig machine, which has dominated the single-serve market for several years.
The Starbucks Verismo is available for purchase on the company’s Web site. The standard version retails for $199.00. A larger, more upscale model with temperature controls and self-cleaning will be introduced for $399. Keurig has a number of different models that range in price from $79.95 to $250.00.
This also creates competition for Nestle, which sells a line of single-serve machines called Nespresso that retails for $129.00 for its most basic version and $699.00 for its top of the line Gran Maestria model.
Starbucks CEO Howard Schultz said, “This machine will be the first on the market…to make brewed coffee, espresso and…a latte with fresh milk. Seventy-five percent of existing Starbucks customers do not yet own a single-cup machine, primarily because the two machines [Nestle and Green Mountain] don’t deliver on the expectations that our customers want.”
The Verismo lets consumers use specially packaged “pods” to recreate the recipes used in Starbucks stores. It has a 1-liter water tank and storage for up to 10 used pods.
Starbucks first announced it would enter the single-serve machine space on March 8, launching a challenge to Green Mountain’s massive 70% share of the U.S. K-cup market. Even as Starbucks stressed its current deal with Green Mountain to sell K-Cups would continue (along with Starbucks, Keurig brews single cups from brands including Dunkin’, Tully’s, Celestial Seasonings and Newman’s Own), Green Mountain plunged on the announcement, just as Starbucks’ stock hit $50 for the first time (on a split-adjusted basis).
According to the National Coffee Association, last year saw a seven percent rise in coffee consumption figures that now puts coffee at a clear, 10-point advantage over soft drinks. This finding upends what had been in the past a neck-and-neck race between the two beverages. Among coffee drinkers, the average coffee consumption in the United States is 3.1 cups of coffee per day. Per capita men drink approximately 1.9 cups per day, whereas women drink an average of 1.4 cups of coffee a day.
A survey taken earlier this year by Accounting Principals found that half of American workers regularly buy coffee during the week, averaging approximately $1,100 a year.
The first Starbucks opened in Seattle on March 30, 1971. In 1988, the three founding partners sold the company to Schultz, a former owner of the Seattle SuperSonicsand the 354th richest person in the United States, with a net worth of $1.5 billion, according to Forbes. By the 1990s, Schultz expanded the number of locations throughout the country and brought the company public on the stock market.
Starbucks is the largest coffeehouse company in the world, with 19,972 stores in 60 countries, including 12,937 in the United States and 1,273 in Canada.