Starbucks CEO positive on potential of new single-cup brewer

theflyonthewall.com

Starbucks (SBUX) CEO Howard Schultz was optimistic about the outlook for his company's new premium single cup coffee brewing machine, Verismo System, during his appearance on CNBC earlier today. Advance sales of the machine are so strong that the company is making as many of them as possible, said Schultz, who claimed that 75% of Starbucks customers haven't bought a brewing machine because they are waiting for the new line. "This product will be accretive for the company over the long-term, and we can become the leader of this market," said Schultz. "We're going to have a great holiday season and Verismo is going to be the star," the CEO added. Asked whether Starbucks would dissolve its partnership with K-Cup maker Green Mountain (GMCR) and make its own K-Cups in the future, Schultz said, "For the time being we're committed to the partnership with Green Mountain." However, he added that "We'll continue to support our partnership with Green Mountain because there are customers who want a brewed coffee machine only...(and) customers aren't looking for a private label offering," explained Schultz. Starbucks' overall outlook is also strong, said the CEO, adding that the company's fiscal year beginning in October would be "fantastic." The coffee giant's business in Asia is strong, while it's seeing signs of improvement in Europe and is confident that it can overcome any macro economic hurdles in the U.S., according to Schultz. In early afternoon trading, Starbucks rose 1.47% to $50.85 while shares of Green Mountain sank $2.47, or 8.02%, to $28.38.

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