Shares of Green Mountain soared to all-time highs and trading was eventually paused as a result of the news that the company was in close talks with Starbucks about a possible merger. Green Mountain has been one of the biggest movers in the coffee industry over the past several years with the emergence of single-serve coffee brewers and the coffee pods that are used in them. Keurig is the dominant name in single serve coffee brewers and the brand is owned by Green Mountain. Many coffee companies make coffee pods that are compatible with Keurig and Starbucks apparently is seeing an opportunity to take its still-powerful brand more clearly in the direction of the single-serve phenomenon.
Oddly, Starbucks burst onto the scene offering consumers a high-end coffee experience at premium prices. Basically, Starbucks brought coffee houses to the majority of America and introduced a better quality of coffee to millions who were apparently unaware of such a product's existence. That approach to high-end coffee and even higher prices flourished during the boom times of the early 2000s and then began to struggle as the macro-economy imploded near the end of 2007.
Starbucks are still everywhere and have built a large and loyal following that will continue to ensure the success of the company, even as it trims the fat somewhat. The biggest challenge to Starbucks may be the very clear "anti-coffeehouse" approach of the single-serve coffee world. Among several advantages of the single-serve approach is that it produces a perfectly consistent cup of coffee every time. The coffee pods are pre-measured, so it's as simple as loading the machine and hitting the button. Premium coffee that is properly brewed and served is now available in the home. Starbucks most certainly wants to be a part of that.
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