Seattle’s Best Coffee is launching K-cups and instant-coffee packages to be sold in supermarkets, a sign that corporate parent Starbucks is doubling down on its packaged-goods business.
The coffee giant, striving to maintain momentum in the mature U.S. market after a record year of earnings, sees the grocery aisle as an avenue for continued growth.
The brand’s adoption of the K-cups, to be used in Keurig brewing systems, underscores the growing importance of the single-serve segment in Starbucks’ packaged-goods foray.
Starbucks reinforced its partnership with Keurig owner Green Mountain Coffee Roasters last May. The deal renewed Starbucks’ collaboration with Green Mountain for a minimum of five years and expanded the partnership to include the Seattle’s Best, Torrefazione Italia and Teavana brands. Their first agreement was inked in 2011.
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Starbucks says the single-serve coffee category is a $1.8 billion market in the U.S. Analysts with Jefferies estimate that Starbucks’ K-cup market share rose to 22.8 percent at the end of 2013 from 16 percent at the end of the previous year.
One in 5 people participating in a recent poll by the U.S. National Coffee Association reported having drunk coffee made in a single-cup brewer the previous day, making it the second-most popular brewing method after drip coffee. Seattle’s Best is offering five varieties of K-cups as a suggested retail price of $7.99 for a pack of 10 at grocery stores, $10.99 for a pack of 16 at Target.
The coffee giant is also introducing to grocery stores three Seattle’s Best instant lattes with vanilla, mocha and caramel flavors. The company has been distributing these lattes at Walmart since September. The suggested price of the roast and ground coffee in bags is $6.99 for a 12-ounce bag. That compares to $8.99 for a 12-ounce Starbucks bag.
Starbucks also launched last week new instant coffees containing dairy under the Via brand.
Unlike the single-serve brewing category, instant coffee has been a lackluster market, cannibalized by a growing appetite among consumers for single-serve brewing systems and specialty roasts, according to market-research firm Mintel.
Seattle’s Best is also launching two new roast blends, named “House Blend” and “Breakfast Blend.” The package has also undergone a redesign that’s expected to make it easier for customers to better differentiate among Seattle’s Best varieties, which also include flavored-coffee blends. The new packaging keeps the existing red/white color scheme, but highlights the markings distinguishing the different blends.
Formerly a rival, Seattle’s Best was acquired by Starbucks in 2003 and is now the company’s value brand.
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