Today Starbucks (SBUX) announced it has chosen Green Mountain Coffee (GMCR) to make Starbucks K-cups. This surprises me because I got the impression Starbucks was going to try and go-head-to-head with GMCR in the single serve coffee market:
Green Mountain has done a very fine job introducing single-serve brewer technology to the U.S. market. And as a result it has emerged as an early leader. But as I have said, these are very early days, and history has demonstrated time and again that patents alone do not determine market winners—deep customer engagement, best-in-class experiences and quality do. — Howard Schultz, Startbucks CEO, February 17, 2011 (full article here).
Starbucks was all-bark-no-bite with those remarks. It basically just rolled-over (to be politically correct) and gave GMCR even more power. Now Green Mountain has a monopoly on the single-serve market.
Shares of GMCR are up 34% to $58 today on the news. The one-year chart done earlier this quarter is above. Stock looked great then but the surge today is strong. I won’t have a feel for what GMCR is worth until next quarter when estimates re-adjust.
At the time of publication, clients of DavidSharek.com owned shares of GMCR.
