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Starbucks and Green Mountain make a deal

|Includes: GMCR, Starbucks Corporation (SBUX)

HedgefundLIVE — With the noticeably sharp spike of GMCR many are wondering why. Since the open, it has spiked 37.23% to about cents below $60. Yesterday, GMCR closed at about $43 dollars. It is reported that Starbucks and Keurig single cup brewer parent Green Mountain Coffee Roasters Inc will sell Starbucks coffee and its Tazo tea in Keurig’s K-Cup portion pack. Starbucks has been working to expand their corporation with the addition of new desserts and other assorted goods. Now, its next move is to sell the amount of a single cup of coffee which it tried doing almost two years ago. This attempt hit the market in October 2009 with the instant coffee line Via.  I tried the instant coffee and to me that was a no go ever again. This single cup strategy, although, could be very useful for virtual offices and places of work to distribute the single cups.

On the other hand, how many families actually have individual machines in their homes to accommodate the new line? This means on top of adding the sales of the single cup packages, sales of Keurig’s brewer will also go higher. Green Mountain’s Keurig in-home and workplace appliances dominate the single-cup-brewer market.  In the fall, the cup portion packs will be sold at supermarkets, wholesale clubs, drug stores, and department stores throughout the U.S. and Canada. Also, the brewers and K-Cup packs will be sold in Starbucks stores in the U.S. and Canada.

I think this rise is going to be short lived. I think everyone else thinks Starbucks is on a roll that’s why they are expanding but it very well could be the opposite; they aren’t doing as well as expected so they are revamping their image to meet the higher expectations. Most think everything associated with Starbucks is golden, but like what Jeremy said, when no one’s making money they’ll run to Dunkin Donuts for a quick, cheap coffee.