Does Starbucks Have a Flop on Its Hands?

Verismo sounds a bit like "very slow," and that may be just how well Starbucks' (NASDAQ: SBUX  ) single-serve espresso maker is selling.

"Tell Santa he can save $50 on Verismo," promises the java giant on its website's landing page.

Indeed.

Between now and Jan. 1, Starbucks is shaving $50 on the entry-level Verismo 580 brewer. The 25% price cut takes it down to $149. The higher-end V-585 model is actually getting a larger $100 haircut to $299.

Hear that, Santa?

Investors sold shares of Green Mountain Coffee Roasters (NASDAQ: GMCR  ) earlier this year, fearing that having Starbucks throw its hat into this ring would dent the company's Keurig empire. We really don't know if that's happening or not, but it sure is suspicious to see a $50 price cut for a product that hit the market only three months ago.

Anecdotal evidence seems to point at Verismo as a bit of a flop. Starbucks.com allows customers to review the products they're buying, and it has just five reviews so far for what is now the $299 V-585 model. Making matters worse is that four of the five reviews rate the brewer just two out of five stars. The owners are complaining about the poor build quality, product malfunctions, and misrepresented features.

It probably doesn't help that they are just seven coffee varieties available. How can Starbucks let buyers choose from four different colors on the exterior of the 580 model but still only give them a small handful of options? The original Keurig doesn't make espresso, but at least it now has more than 200 K-Cup flavors to choose from.

We'll see what happens come Jan. 1. It seems highly unlikely the that high-end model can justify its original $399 price tag, and we'll have to see if going from $199 to $149 on the more accessible 580 model will break through to consumers.

Santa, we've got a problem.

Brew-ha-ha
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  • Report this Comment On December 17, 2012, at 11:16 AM, LQM2 wrote:

    Verismo doesn't use real milk. Yech. End of story.

  • Report this Comment On December 17, 2012, at 8:03 PM, EvilAuntEdith wrote:

    Yep. Not real milk - give me a break!

    Here's the deal - Starbucks is GREAT at what it's core business is. I know some don't like "charbucks" and the coffee does take some getting used to, but let's face it - they introduced lattes to middle America. Yes, they're corporate and hipsterish, but they are comfortable for many, provide a great product, etc. etc.

    Until they tried to do two things- one is Via - I tried it and what? It tastes just like instant coffee, because it IS instant coffee. Big yuck to me. I can buy the beans, take them home and use the burr grinder, and put them in my little KEURIG basket and make up a really good cup of coffee at home. Or go in and buy a latte.

    And yes, the second big flop is the Verismo.

    Obviously, from my above comment, I have a Keurig machine. It works great and makes a single cup of coffee that is fresh every time. Terrific upgrade from making the pot of coffee only to have it get old over time.

    I saw the Verismo and once I SAW the fake milk, I knew it was not going to be competition to Keurig - plus the price point is ridiculous.

    Starbucks - go back to your core business!

  • Report this Comment On December 22, 2012, at 8:07 PM, Saintramus wrote:

    I feel vindicated. I wanted to want the Verismo, but when I checked it out, I didn't.

    I agree with you, EvilAuntEdith, on the thumbs down on Via and the core business thing.

    I don't own a Keurig but think I might want to go retro and get a machine that will make an espresso.

    Sr

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