Starbucks to sell single-cup home-brew machine

@CNNMoney March 8, 2012: 7:36 PM ET
Starbucks unveiled its own single-cup home-brewing machine Thursday, sending shares of competitor Green Mountain Coffee Roasters reeling in after-hours trading.

The Starbucks Verismo machine can make both espresso beverages and brewed coffee.

NEW YORK (CNNMoney) -- Starbucks unveiled its own single-cup home-brewing machine Thursday, sending shares of competitor Green Mountain Coffee Roasters reeling in after-hours trading.

Starbucks will begin selling its "Verismo" machine this fall, the company said in a statement, which did not offer pricing information.

Green Mountain currently dominates the single-serve market with its popular Keurig, or K-Cup, machines.

Last year, the two companies announced a deal allowing Green Mountain to produce K-Cup versions of Starbucks coffees and Tazo teas. With the Verismo, however, Starbucks is moving into single-cup brewing for itself, partnering with Germany-based Krueger GmbH & Co. KG to produce the machine.

"The premium single-cup segment is the fastest-growing business within the global coffee industry," Starbucks CEO Howard Schultz said in a statement.

"We have long believed that the biggest prize within the segment is a high-pressure system that would give us the opportunity to deliver Starbucks-quality espresso beverages at home and at work for customers who desire the Starbucks espresso experience outside of our stores."

Shares of Green Mountain (GMCR) were down more than 20% late Thursday, dipping below $49 after closing at $62.40. Starbucks (SBUX, Fortune 500) was up more than 3% after-hours, after closing at an all-time high of $50.37.

Starbucks gave no indication that it would dissolve the existing agreement with Green Mountain. Starbucks said that it shipped over 100 million K-Cup packs in the eight weeks following last year's launch, and that the Starbucks K-Cup business "continues to accelerate."

"This is complementary to our partnership with Green Mountain, and they can and they will co-exist," Schultz said in a call with analysts.

Schultz noted that the K-Cup brews coffee in a low-pressure machine, while the Verismo will also offer espresso-based drinks.

Representatives of Green Mountain did not immediately respond to a request for comment Thursday.  To top of page

CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.