The einhorners and others short on sbux and GMCR don't get it yet, but the problems with Verismo (principally an espresso brewer) are great news for both SBUX and GMCR shareholders.
Those who are suddenly figuring out the very expensive Verismo brewers are not very good and the espresso they make is back from the shop version and will cost two pods to make a tall (call it $3.60 including the metallic tasting powdered milk) or about as much as it does to buy one in the local sbux shop, will soon be figuring out they should try one of the new Keurig Vues, or even one of the old kcups models.
The keurig products work great, letting the drinker select for temp, strength, size, lattes, capauchino give you a choice of over 200 varieties including 135 or so coffees (incl Dunkin Donuts, Green Mountain, Newman's Own, Caribou, Bigelow and now Snapple. Hey, you may not be aware you can even get a Starbucks blend they have partnered up on with GMCR). If you want home brewed espresso, you may want to wait for the new brewer coming for that purpose... ya, GMCR is working on bringing forth those, too.
How does all that help sbux shareholders? Well, first of all sbux will continue to participate in the rapidly growing Single Serve market because SBUX pods work well on Keurig (GMCR) partnered machines. Other sbux customers who thought they were going to enjoy home brewed espresso on the Verismo's will be going back to the sbux shop for their morning Venti. This group will help restore sbux store visitation and gross and operating margins vs the crimp home espresso brewing was going to precipitate.
For GMCR shareholders, this sbux Verismo reason to remain short GMCR is already cooked under the broiler -- 600 degrees cooked and blackening by the minute. The new Vue brewers are going to benefit hugely from the Verismo fail and increasing awareness of the economic advantages of the GMCR options, and the ever expanding consumer choices under the GMCR banner will continue to demonstrate the stupidity of "einhorning" of themselves over at Greenlight Capital.
We expect sbux stock will begin the claw out of the shallow hole they dug with the ill-fated Verismo as early as this week. We'll even reload it of the short gumpers can push it down to $45 suggesting the Verismo fail is bad news for sbux stock.
GMCR's stock will likely soon reflect one of the best short mashings of the year as it rages back above $30 on the upcoming CC and into a smashingly great December quarter. See you all back in $50 land in 2013.
Verismo will be a dent on SBUX carefully protected image. SBUX better get w/ wave; people will pay for coffee but want it fresh thru SC not the random good or bottom of the barrel w/ grounds you get at SBUX.
I can confirm that because I tested the Verismo yesterday...Starbucks employees may just be the biggest fans of Keuring. Small wonder their CEO has nothing but praise for Green Mountain. It's a strong strong buy under $30
After testing Starbucks’s (NASDAQ:SBUX) Verismo brewer and Green Mountain Coffee Roaster Inc.’s new Vue machine, Lazard Capital believes Vue demonstrated broader appeal, even though Verismo rated higher among more sophisticated coffee palates. The firm said that their sample group views the single serve market as an alternative to a daily cafe purchase which leads them to believe that near-term investor concerns over pricing pressure are overblown.
SBUX shoud stick that works for them and get out of the Single Serve market. They should just simply partner up with GMCR and not compete with them directly. Why would they want to be selling a brewing machine. This is beyond me....