Who is going to be Starbucks friend in the Single serve coffee market?

by Chee Leng
(Singapore)

The news is out that Starbucks relationship with Tassimo is going to end soon. And looking at the many articles and analysts talk in the markek, it is unlikely that they would continue any relationship.

Then, we all know how much "hot" the single serve coffee segment and of course, everyone wants to get into it, Starbucks included.

In fact, Howard Schultz in an interview last Friday specifically talk about Starbucks plan to enter the coffee market with a single serve coffee maker and coffee pods.

So, who could be Starbucks friend and ally moving ahead? There are a few big players in the market, I doubt Starbucks would go for smaller players. There are Nespresso, Keurig, Sara Lee and Melitta.

Of the 4 companies, other than Keurig, Nespresso, Sara Lee and Melitta all have their own coffee. That means, they have more vested interest to promote their own coffee, rather than other coffee brands, and they are also not known to work with other coffee companies.

Thus, my take is the likelyhood of them partnering with Starbucks is not high. Keurig on the other hand have a history of partnering with other companies although it does have its own coffee -GMCR.

And they are by far the biggest player (in the states) when it comes to single serve coffee maker. Thus, if there is any good partner to go into this market -it would be keurig.

As I mentioned in the previous article, single serve coffee market is really heating up. Nestle just launched its Dolce Gusto in the States in all Walmart outlets, and now Starbucks announces its entry.

Either Starbucks ally with Keurig or not, it is going to cause an upheavel in the market, here is why.

1. Starbucks already have a huge network of distribution in the states and worldwide, and recently announced that they are adding another 500 outlets.

2. In 2010, they have forged strong and good relationship with retailers when they launched their Via coffee, with thousands over outlets selling their via.

3. In addition, they are actively marketing their Via coffee in the traditional retail channels in important markets such as Japan in Asia.

In my personal opinion, it would be more strategic for Starbucks to team up with Keurig (starbucks being a new entrants to Single serve coffee) to mitigate the threat from Nespresso, then once that is managed, they can decide how to split the turf.

In any case, the single serve coffee market is something like the Middle East, lots of action!