Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Starbucks (Nasdaq: SBUX ) popped 11% in intraday trading today after announcing a deal to bring its coffees and teas to Keurig's popular single-cup coffee brewers.
So what: Green Mountain Coffee Roasters (Nasdaq: GMCR ) will manufacture, market, and distribute Starbucks' coffee and tea for Green Mountain's Keurig single-cup systems in the U.S. and Canada. Sales of Keurig's machines have been robust, while sales of Starbucks' single-serve VIA Ready coffee have been only lightly roasted.
Now what: Starbucks' revenue fell in 2009 because of consumer spending cutbacks and increasing competition from lower-priced offerings. As many consumers switched to brewing their own to save money, Keurig machines were a big winner. The established and growing network of Keurig owners were not likely to invest in a different brewing machine and would remain difficult for Starbucks to access without a deal like the one announced today.
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