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Should Starbucks Buy Peet's Coffee?

Stocks in this article: SBUXPEETGMCRKFTSLENSRGY.PKCL

Canaccord Genuity consumer analyst Scott Van Winkle noted that the Starbucks-Green Mountain deal lessens the risks of K-Cup competition. "The deal's impact on Green Mountain shares is rightfully more than the impact on near-term earnings or cash flow," Van Winkle added. "We believe that the Starbucks partnership reduces risk by at least 20% and thus have increased our near-term price-to-earnings target by 20%."

Peet's Coffee

Maxwell House coffee is owned by Kraft Foods. Until recently, Starbucks had been providing coffee discs for Kraft's Tassimo single-cup home brewers . That agreement officially ended March 1 after a drawn out, public legal battle between the pair in which Starbucks claimed that Kraft neglected and mismanaged the partnership.

Despite Tassimo's success with some consumers, Green Mountain's Keurig brewing system enjoys market share of around 80%, according to Reuters, dominating other competitors as well, including Sara Lee's (SLE) Senseo brewer and Nestle SA's Nespresso system.

Earlier this year Starbucks unveiled a new, wordless logo . At the time, CEO Howard Schultz said that the wordless logo, in part, "gives us the freedom and flexibility to think beyond coffee."

The new logo, officially launched this month, also represented Starbucks expansion plans, and the rumors circulating about a Peet's takeover could very well be the latest round of the Seattle coffee shop chain's growing global footprint.

With all this in mind, what do you think? Should Starbucks be angling to acquire Peet's Coffee? Take our poll below and see what readers of TheStreet think...


Should Starbucks acquire Peet's Coffee?

Yes -- Starbucks' takeover of Peet's would allow it to further dominate the in-store coffee market.
No -- Starbucks should continue to concentrate on growing its single-serve presence and focus less on store growth.

-- Written by Miriam Marcus Reimer in New York.



>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.

>To submit a news tip, send an email to: tips@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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