Starbucks is fast! It is growing their single serve coffee market with Courtesy Products.

by chee Leng (on coffee makers)
(Singapore)

In fact, depending on your definition -Starbucks is already in the Single serve coffee market!

Some define single serve as the machine that serves coffee in a single portion, while others define sticks, instant, pods and everything that produce one cup of coffee as single serve.

So, if you are the latter, then Starbucks is already in the market for a year selling their Via ready coffee in more than 50 000 points of distribution -no mere feat even for a big company like Starbucks!

Now, if you are the former, thinking that single serve meant machine that serves only one cup of coffee, Starbucks announced a few ago that it is coming out with some new solution, and now it is entering into premium single serve solution with Courtesy Products.

You have to give credit to Starbucks, they are fast. When they wanted to do something, their execution is lightening fast.

Courtesy Products supplied coffee with their CV1 to more 500 000 rooms in the US. And with this partnership, Starbucks would be providing the coffee that would be served on CV1.

CV1 cannot be considered a true blue single serve coffee maker, it is more of a single portion drip coffee maker. You insert the filter pack of coffee and the machine brew it for you.

The filter pack is not hermetically sealed, thus to me, it is not a coffee pod and not a single serve.

Starbucks is smart in two ways, first, it is allowing more people to try their coffee via this partnership, secondly this could effectively be their base for launching their own single serve.

Do the maths, would Courtesy Products have much reason to reject Starbucks if they would to propose a single coffee solution comprising of a machine?

Currently, if Courtesy Products would to supply the machine CV1, they have to maintain it and probably exchange it if it breaks down.

Then, there is the production cost, the logistics cost etc.

If Starbucks would to come out with a machine, and they would to absorb all the cost but get a higher margin from Courtesy products, everyone wins!

That would be extremely good for Starbucks because it gives them bulk, economy of scale. 500 000 machines production allow them to negotiate for lower cost of production.

This would allow them to retail their machine at a much lower selling price. Lower price tier is essential to market penetration.

All this in place, Starbucks is looking at a very good position to challenging Keurig in US and Nespresso internationally.

If they can repeat what they did for Via, they could likely be the third largest Single serve coffee maker producer in 3 years time!

My $0.02.