SBUX – TAKING A SHOT AT GMCR

I think we might now have an idea of how SBUX is going to market VIA.

 

One of SBUX’s smaller competitors, PEET, tried to make an entry into the single-serve segment by buying Diedrich Coffee (DDRX) but lost out to a competing bid by GMCR.  In a recent meeting with PEET’s management, the company communicated its continued desire to enter the single-serve segment.  Management gave no details, but I think another attempt at an acquisition is likely.  Whether it is through an acquisition or Peet’s creates its own position within the single-serve segment, the company seems intent on staying within the business of selling coffee, however, and does not want to get into the business of manufacturing single-serve brewing equipment.  Either way, Peet’s will face competition.

 

It appears that SBUX is also making a bet on the single-serve segment, but is entering the market in a different manner.  Last night on the SBUX earnings call, management said “Our customers have told us that their most frequent usages of VIA are in their homes or at work as a single serve option they favor for its flavor and taste and because and it does not require costly proprietary brewing equipment. Building on the broad customer acceptance through our retail channels we are ramping up VIA launch efforts through our retail company-operated stores outside of North America and poised to introduce distribution of VIA through North America and international channels in the third quarter of this fiscal year.  We're also planning to introduce additional premium coffee varietals and form factors to aggressively go after the at-home and office single serve markets as well as the $21 billion global instant coffee category. VIA continues to excite and represent a major significant opportunity for the company.”

 

In addition to being sold at Starbucks locations across the U.S. and Canada, VIA is also available at Costco, Target, REI and online at amazon.com, cooking.com and officedepot.com.  SBUX has plans to sell VIA in the grocery channel but has not yet announced when it will begin to do so.


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