Starbucks Corp. (SBUX) has announced that it will partner with Courtesy Products and introduce single-serve beverage machines. This brewer is expected to be sold at U.S. supermarket chains and warehouse club stores. It will brew Starbucks and Seattle’s Best coffees, which is a subsidiary of Starbucks.
Starbucks and Courtesy Products had recently inked a deal whereby it would provide coffee to Courtesy Products’ CV1 one-cup brewers in as many as 500,000 upscale hotel rooms in the United States. The new partnership for selling its own brewers is an expansion of this already existing relationship with Courtesy, the leading supplier of guestroom amenities.
Analysts feel that Starbucks is making this move to compete with Keurig. The details of the deal have not yet been penned down, but the machines will cost less than Keurig brewers, the market-leader in single-serve beverage machines. Keurig machines are sold for up to $179.99 on bedbathandbeyond.com, a major online seller of the brewers.
High Single-cup coffee sales were the key driver of coffee consumption in the US last year. Starbucks expanded its presence in this category last year through the introduction of Starbucks ‘Via’ Ready Brew. Starbucks recently launched ‘Via’ instant cup coffee in China and Japan, which was a huge success. Business from ‘Via’ instant coffee packets, has ramped up more than $194 million in sales.
Starbucks recentlyentered into a deal with Keurig brewer parent Green Mountain Coffee Roasters Inc. (GMCR). As per the deal, Starbucks will distribute its coffee and Tazo tea in Keurig’s K-Cup portion packs.
Currently, we maintain a ‘Neutral’ rating on the stock for the long term. Further, Starbucks holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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