* Looking to expand beyond Via in single-serve market
* Starbucks exploring all options in single-cup segment
* Deals could include partnerships or machine sales
* Starbucks deal on Kraft single-cup brewer ending March 1
By Lisa Baertlein
LOS ANGELES, Feb 13 Starbucks Corp (SBUX.O),
the world's biggest coffee chain, on Sunday said it plans to
announce a new product for the single-serve market "in the near
Analysts long have expected Starbucks, which also sells Via
instant coffee packets, to make a more aggressive move into the
small, but fast-growing single-cup brewing segment.
Word of its new plan comes as Starbucks is getting ready
for the March 1 termination of an agreement by which it
provides coffee discs for Kraft Foods Inc's KFT.N Tassimo
one-cup home brewer.
Kraft's Tassimo brewer won some loyal fans with its bells
and whistles, but it was bested by Green Mountain Coffee
Roasters' GMCR.O generally lower-cost Keurig brewing system
that now has a near-monopoly in the single-cup category with
roughly 80 percent market share.
While several analysts expect Starbucks to begin providing
coffee for the Keurig system, some also have concerns about
expiring Green Mountain patents, patent challenges and whether
current Keurig users will migrate to the company's new
"Starbucks is currently exploring all options to expand its
presence in the premium single-cup coffee category, beyond our
initial entry with Starbucks Via Ready Brew," Starbucks
spokeswoman Lara Wyss told Reuters.
"Single-serve is still in the earliest stages and no clear
delivery system has been established as the gold standard so it
is important for us to look at all options," Wyss said.
KRAFT DEAL WINDING DOWN
Starbucks and Kraft -- which has distributed Starbucks'
packaged coffee and other products to supermarkets and other
stores for more than decade -- will part ways on March 1.
Starbucks announced its plans to end the partnership in
November. The companies since have been battled over various
clauses in their agreement, including whether the Tassimo deal
was exclusive. For details, see [ID:nN28164356]
"In our opinion, neither Kraft nor Starbucks put
substantial effort to drive sales of the Tassimo machine, but
(Starbucks) next single cup effort will be different," JPMorgan
analyst John Ivankoe said in a December note to clients.
"We believe such product will be incremental to Starbucks'
store sales and could easily be a $1 (billion) revenue
opportunity for Starbucks in the US alone," Ivankoe said.
Most Starbucks customers do not now have a single-serve
machine and Wyss said the company intends to transform the
market the way Apple Inc's (AAPL.O) iPhone rocked the cell
Starbucks' options include partnerships with other
companies, extensions to its Via line or even sales of a
single-cup brewing machine through its retail stores, Wyss
"We don't have any specific announcements at this time ...
but should have information in the near future," she said.