Starbucks eyes single-serves

CHICAGO – With just weeks until Starbucks Coffee Co. plans to wrest its packaged-coffee business from Kraft Foods, the Seattle-based coffee giant is planning a big splash into the single-serve coffee market.

The company confirmed to the Chicago Tribune it is working on a new product for single-serve coffee machines.

Experts say that any significant effort by Starbucks is likely to transform the $509 million single-serve coffee market in the United States by bringing more consumers into the fold. According to Euromonitor International, single-serve coffee accounted for only 7 percent of the fresh coffee market in 2010. But that’s up from 2 percent in 2008, and it is expected to hit 10 percent in 2012.

“Single-serve brewing is going to steadily take share from at-home coffee brewing for a long time,” said David Palmer, an analyst with UBS who follows Kraft and Starbucks.

Lynn Dornblaser, director of consumer-products insight at Mintel International, said a meaningful Starbucks entry could be a “catalytic event” in single-serve coffee.

Single-serve coffee is made, in about 40 seconds, by inserting a small plastic container into a specialized machine. These containers, known as pods, come in a variety of flavors for coffee or espresso-based beverages. There are also pods for hot chocolate and tea.

The sticking point for some consumers is cost. A machine may cost between $75 and $275. And while most consumers can make a cup of drip coffee for 10 cents or less, single-serve pods can cost 50 cents to $1.