Starbucks Scrutinizes Single-Cup Caffeine (SBUX, GMCR, KFT)

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Starbucks
SBUX
is coming for your coffee cup. Starbucks plans to take single-cup steps independent of current market leader Green Mountain Coffee Roasters
GMCR
, according to Starbucks'
internal memo
that was leaked yesterday. Starbucks' further announcement to partner with Courtesy Products this past Tuesday will allow the coffee conglomerate access to up to 500,000 hotel rooms nationwide via Courtesy's CV1 in-room and on-demand single brewed coffee cup system. Starbucks has said it will launch its CV1 premium coffees in the fall of 2011.
As Benzinga readers know
, Reuters reported rumors of Starbucks and Green Mountain Coffee Roasters meetings Monday, but neither company has confirmed nor denied a collaboration. Green Mountain Coffee Roaster's partnership with Keurig, the leading single-cup system in North America, gives Green Mountain an admitted strategy for the short-term, but one thing is for certain: Starbucks is poised for a large market-moving strategy. "The single-serve segment of the coffee industry is poised for a sea change of innovation," CEO Howard Schultz stated in the Starbucks leaked memo. "We will win by delivering quality in the cup, every time, and by capturing the hearts and minds of millions of loyal customers, in the U.S. and throughout the world." If Starbucks and Green Mountain Coffee Roasters do not partner, what will the battle field look like? Green Mountain is a market maven in the single-cup coffee brewing industry, but has yet to emerge as an international player. Starbucks' current deal, providing coffee discs for Kraft Foods
KFT
) is set to expire on March 1 of this year, freeing the company to pursue other opportunities. The clash for coffee is likely to go international. U.S. consumers have yet to swarm to single-cup brewing but European households embrace the model, Schultz stated in the Starbucks memo. In Germany, he states, almost 40% of households own a single-cup brewing machine. "Now consider that approximately 80% of Starbucks customers do not yet own a single-serve coffee machine in their homes," Schultz stated. "This fact alone suggests that we are, again, at the very early stage of adoption and that Starbucks has a fantastic opportunity to introduce and deliver new single-serve coffee innovations to our customers." Shares of Starbucks were trading at $33.99 at the time of posting, up 1.46% from Thursday's market close. As Benzinga readers know
, Green Mountain shares are rallying today at $42.01 at the time of posting, up 3.20% from Thursday's close.
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Posted In: Long IdeasTrading IdeasConsumer DiscretionaryConsumer StaplesHoward SchultzPackaged Foods & MeatsRestaurants
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