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Starbucks to sell single-serving coffee machines

By Candice Choi

Associated Press

Published: Thursday, March 8 2012 4:30 p.m. MST

FILE - In this Feb. 26, 2008 file photo, a Starbucks customer drinks coffee in Palo Alto, Calif. Starbucks Corp. said Thursday, March 8, 2012 that it will soon sell a single-cup coffee machine that lets people brew lattes and other coffee drinks at home. The Seattle-based coffee chain says the Verismo will go on sale online and at some Starbucks cafes this fall. It's keeping the price of the machine a mystery for now.

Paul Sakuma, File, Associated Press

Enlarge photo»

NEW YORK — Starbucks Corp. said Thursday that it will soon sell a single-cup coffee machine that lets people brew lattes and other coffee drinks at home.

The Seattle-based coffee chain says the Verismo will go on sale online, at high-end specialty stores and at some Starbucks cafes this fall. It's keeping the price of the machine a mystery for now.

Starbucks first entered the single-serve market with its Via Ready Brew instant coffee in 2009 and started selling K-cup packs for Green Mountain Coffee's Keurig single-cup machines in November.

CEO Howard Schultz said in a webcast after the announcement that the new machine is for customers who also want to make espresso drinks. Keurig's low-pressure machines, by contrast, are just for brewed coffees.

Schultz said Starbucks had been transparent with Green Mountain and the two companies continue to enjoy a positive relationship.

"This is not about any disappointment with Green Mountain; it's about controlling our own destiny." Schultz said. "They can and they will co-exist."

Shares of Green Mountain Coffee Roasters nevertheless sank $9.90, or 16 percent, to $52.50, in after-market trading. The shares had closed down $1.32 at $62.40.

Shares of Starbucks rose $1.64 after hours to $52.01.

Starbucks says its new machine and coffee and milk pods are being developed in partnership with Krueger GmbH & Co KG, a privately held German company. It wouldn't describe the partnership in detail.

Starbucks said there will be no impact from the Verismo on its fiscal 2012 financial results; the impact on fiscal 2013 will be disclosed in its third-quarter results in July. Fiscal 2013 begins in October for Starbucks.

Schultz said the new machine was part of "a broad-based, long-term strategy" that began about three years ago when the company entered the $8 billion dollar single-serve coffee industry.

Starbucks has a three-pronged strategy: Via Ready Brew is intended for those who don't want to buy a coffee machine; K-cups are for those who want a basic brewed coffee and Verismo will be for more sophisticated coffee drinkers.

Schultz has said in the past that Starbucks' packaged-goods business could one day rival its cafÉ business.

Starbucks stock, which had traded between $33.72 and $49.52 the past year, rose 88 cents in regular trading to close at a new 52-week high of $50.37.

Follow Candice Choi at www.twitter.com/candicechoi

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