NEW YORK — Starbucks Corp. is turning up the heat on the single-serve coffee market, and someone might get burned.
The Seattle-based company says it will start selling its new single-serve brewer online this week for $199. The machine will be rolled out in its ubiquitous cafes next month.
The arrival of the Verismo, which was announced earlier this year, comes amid intensifying competition in the piping hot market for single-serve brewers and the coffee pods they use.
The sector is currently dominated by Green Mountain Coffee Roasters Inc., which pioneered the market after its acquisition of the Keurig brand machine in 2006. But this month, the company's patent on its K-cup technology expired, which spawned copycat versions of coffee pods for Keurig machines.
Starbucks' decision to sell its own brewer comes less than a year after it struck a deal with Green Mountain to make coffee pods for Keurig machines. Now Starbucks is looking for a bigger piece of the pie.
In an interview with The Associated Press, Starbucks' CEO Howard Schultz said that the relationship with Green Mountain will continue and that Starbucks will still sell its pods for Keurig machines in cafes. He said that the Keurig machine is "a fantastic choice" for customers who want only brewed coffee.
The Verismo, however, uses a high-pressure system that can make lattes and other espresso-based drinks, as well as brewed coffee. Essentially, Starbucks has said its machine targets a different type of customer.
"They'll coexist and be complementary," Schultz said.
Investors aren't so certain. When Starbucks first announced its plans to roll out the Verismo in March, shares of Green Mountain plunged. Green Mountain's stock has lost 51 percent of its value since then. Starbucks' stock is little changed in the same period.
Green Mountain, which is based in Waterbury, Vt., has also been targeted by a Securities and Exchange Commission inquiry into its accounting methods. Last month, Green Mountain noted that its growth is slowing but that it still expects sales to increase by 15 to 20 percent next year.
The company said in a statement that it has built a strong customer base for its Keurig system, which offers 30 brands and more than 200 coffees, teas and other drinks.
"Since the early days of single-serve coffee, we have successfully competed against well-resourced companies," the statement said.
Green Mountain also says it's on track to introduce its own high-pressure espresso system on a limited basis in time for the holiday season.
Schultz said Starbucks identified the single-serve coffee market as a "big opportunity" about two years ago. Since introducing its pods for the Keurig system last year, he said Starbucks has captured 15 percent of the market. And last year, he noted that the market for brewers and pods nearly tripled to $8 billion.
"It's rare that you identify a category as large as this that's growing," Schultz said.
In addition to the $199 Verismo, Starbucks will sell a $399 a model with a larger water tank and LED display that tells consumers when the machine needs to be cleaned. Green Mountain's Keurig brewers cost from $99 to $189.
By next week, the Verismo will be available in specialty stores such as Williams-Sonoma and Bed, Bath & Beyond. Specialty stores also sell other brewers, including the Tassimo by Kraft Foods Inc., which costs between $100 and $170. Starbucks had previously provided coffee discs for Tassimo, but has since ended that agreement.
Starbucks says it plans to tout its brewer with a multimillion-dollar marketing campaign. Schultz noted that customers will be able to buy both the machines and pods at its cafes.
"We're going to make it very, very easy for our customers," he said.
As for the name, "Verismo" is a word derived from a form of Italian opera. As The Wall Street Journal noted earlier this year, the operas usually end with someone's death.
Follow Candice Choi at www.twitter.com/candicechoi
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Coffee By Design
Sixteen years ago <a href="http://www.coffeebydesign.com/" style="font-size: 17px; font-weight: bold; " target="_blank">Mary Allen Lindemann and Alan Spear</a> opened this tiny coffee shop in Portland, Maine with the idea of building a place for the community. Over the years, the shop has grown from their original Congress Street location to three other shops and a micro roaster where they process all their beans. But despite their mini-expansion, the independent store remains homey and popular for Mainers as they continue to serve the community one cup of Fore Street coffee at a time. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/best-barbecue-restaurants-in-10-us.html" target="_blank">The Best BBQ Restaurants in 10 U.S. Cities</a>]</strong>
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Seattle has always held the reputation of being the coffee king, so picking one of their numerous cafes wasn't easy. <a href="http://www.espressovivace.com/" target="_blank">Espresso Vivace</a> was chosen for its rich history in the Seattle scene, and for their rich Northern Italian espresso. Since 1988, owners David Schomer and Geneva Sullivan have made the art of espresso their life and have delved into roasting, pulling, preparing, pouring and grinding for the perfect shot. Each of their three locations remain unique too, one is a sidewalk bar, another a European style café and the third a more modern coffee shop featuring a cool design. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/craziest-thing-ive-ever-eaten-epic.html" target="_blank">The Craziest Thing I've Even Eaten: Epic Tales of Bizarre Meals</a>]</strong>
Firestorm Cafe And Books
Coffee shops have often been associated with poets, activists, college students and any artistic type looking for a caffeinated connection. And, given that the <a href="http://www.firestormcafe.com/" target="_blank">patron saint of Firestorm </a>is writer and feminist Voltairine de Cleyre, this stereotype fits perfectly with this café in Asheville, NC, and not in a bad way. The cafe opened in 2005 with the goal to be worker-owned, and for the past six years, they have achieved that goal while also using Counter Culture Coffee to make a mean cup of joe. <strong>Also see: <a href="http://www.zagat.com/buzz/8-things-you-can-do-to-make-your-server-hate-you-0" target="_blank">8 Things You Can Do To Make Your Server Hate You</a></strong>
The artistic aura that Austin puts out has been drawing people in for decades and, like any good, creative-minded person, they need caffeine. <a href="http://flipnotics.com/" target="_blank">At Flipnotics</a> they get that and for the past 19 years this quirky café has served the needs of musicians and artists with cups of steaming Fair Trade organic coffee and by hosting live bands. Also, while the shop remains laid back, that doesn't mean the baristas are lazy, in fact, the coffee mavens here make some of the best lattes and cappuccinos out West. <strong>Also see: <a href="http://www.zagat.com/buzz/the-10-most-annoying-restaurant-trends" target="_blank">The 10 Most Annoying Restaurant Trends</a></strong>
As independent coffee shops started closing up in Denver after the corporate coffee boom, <a href="http://www.pabloscoffee.com/" target="_blank">Pablos has remained strong</a> since 1995. Owner Craig Conner first catered to the theater crowd at his original location next to the Denver Performing Arts Center. Now the shop has moved and taken root in the historic Alamo Placita neighborhood and not only serves up quality cappuccinos, lattes and café solo, but they roast their own beans daily. Aside from keeping the community caffeinated, they also host an annual pancake brunch extravaganza for their customers. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/10-high-end-bbq-spots-around-us.html" target="_blank">10 High-End BBQ Spots From Around the U.S.</a>]
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