Explaining Southern California's economy

Starbucks goes single-cup

Starbucks Verismo

Starbucks

Starbucks introduces a single-cup coffee-brewing system. Can you say "Verismo?" And of you love espresso, do you want to?

Big news! But bad news for Green Mountain Coffee Roasters. Starbucks just announced that it will begin selling a single-cup home coffee-brewing system. This is from MarketWatch:

Starbucks said its brewer, called Verismo, will make coffee, espresso, latte and Americano drinks. Verismo will be available by the 2012 holiday season and be sold over the Internet, as well as at certain Starbucks stores and retailers.

In a statement, Starbucks didn’t give pricing information or indicate how this would affect its current relationship with Green Mountain, which this past fall began selling K-Cups with Starbucks coffee. In the first two months, Starbucks shipped more than 100 million of its branded K-Cup packs.

The single-cup coffee brewer market is growing fast, and Starbucks Chief Executive Howard Schultz has been seeking to make a strong push into it.

“We have long believed that the biggest prize within the segment is a high-pressure system that would give us the opportunity to deliver Starbucks-quality espresso beverages at home and at work for customers who desire the Starbucks espresso experience outside of our stores,” he said in the statement.

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Starbucks buys Evolution Fresh for $30 million, but juice is just the beginning

Mercer 19107

Stephen Chernin/Getty Images

File: A Starbucks Coffee barrista readies a beverage for a customer in the new 42nd Street store August 5, 2003 in New York City.

Yesterday, Starbucks announced that it's buying Southern California's own Evolution Fresh Inc., for $30 million. That's pretty small potatoes as M&A activity goes. But for Starbucks, buying the juicemaker — which, according to the Starbucks announcement, is "one of the only true juiceries left in the industry that still cracks, peels, presses, and squeezes its own raw fruits and vegetables" — is just the beginning of the beginning.

And a risky undertaking.

Starbucks wants to move beyond coffee and expand its presence far beyond its retail stores. So far, it's been doing this slowly and carefully — and has already endured one misstep, when it over-expanded prior to the financial crisis. In Steve Jobsian fashion, CEO Howard Schultz returned to the company to trim, reinforce, and realign. The ship was righted. But now it's looking to grow again. 

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Meet Starbucks, your new neighborhood investment bank

Customers queue for coffee at Starbucks

PAUL J. RICHARDS/AFP/Getty Images

Welcome to your friendly neighborhood investment bank. Do you want them to leave room for...return on investment?

Here's an idea that's going to get people talking — and funding small businesses. The New York Times' Joe Nocera writes his column today about Starbucks' plan to partner with microfinance organization Opportunity Finance Network to solve a major American problem: a lack of small-scale lending. The project is called Create Jobs for USA. It's a great idea, but it has at least one significant problem: return on investment for the Starbucks customers who would be putting up their money.

Starting November 1, while waiting for you nonfat vente caramel latte, you can donate, say...$5 to the cause. You'll receive a red, white, and blue "indivisible" bracelet (the bracelet is an inevitable piece of viral marketing these days). Starbucks will seed the fund with a $5 million donation. As Nocera points out, this will enable Create Jobs for USA and OFN to borrow against this fund, utilizing a 7-to-1 leverage ration. Presto! Your $5 becomes $35.

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