Did Starbucks Just Kill Green Mountain?
The following video is part of our "Motley Fool Conversations" series, in which consumer-goods editor and analyst Austin Smith and chief technology officer Jeremy Phillips discuss topics across the investing world.
In today's edition, Austin and Jeremy talk about Starbucks' (NAS: SBUX) new entrance into the home coffee brewing market. Of course this has huge implications for Keurig device maker Green Mountain Coffee Roasters (NAS: GMCR) . However, Starbucks is very careful to point out that Keurig's device is a low-pressure brewer, while Starbucks' new brewer, the Verismo, is a high-pressure brewer. This means the Verismo will be more focused on espressos, cappuccinos, and other speciality beverages. Despite the stated differences in product focus, this seems to be a shot across partner Green Mountain's bow. While current devices are low-pressure brewers, Green Mountain recently announced its own espresso-focused machine, the Vue. Furthermore, the company is partnering with Luigi Lavazza SpA to create a high-pressure capsule system. So while Starbucks' new product isn't direct competition to Green Mountain's current brewers, it's important to see that it is a direct threat to its new model. This puts Starbucks that much closer to nailing Green Mountain's coffin shut.
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At the time this article was published Austin Smith has no positions in the stocks mentioned above. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of Starbucks.Motley Fool newsletter services recommendGreen Mountain Coffee Roasters and Starbucks. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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