New Starbucks kiosks to sell $1 coffee

The kiosks, developed through a joint venture with Coinstar, will exclusively offer Starbucks' Seattle's Best brand.

By Benzinga Jun 6, 2012 4:25PM

By Katey Stapleton, Benzinga Staff Writer

Coinstar (CSTR) has entered an agreement with Starbucks (SBUX) to open hundreds of kiosks all over the country, much like the ones shoppers now dump jars full of change into. The difference? They will brew coffee for $1.

The new kiosks, named "Rubi," will pop up at grocery stores, pharmacies and mass retailers.

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Coinstar has agreed to provide kiosks that only brew Seattle's Best Coffee, and in return Starbucks has promised not to forge any agreements placing its product in other companies' kiosks or vending stations.

Starbucks has been pushing out new products, such as espresso machines and energy drinks, with breakneck speed, attempting to ramp up sales as its traditional cafe business has matured. The company announced this week it is buying a San Francisco bakery chain to improve its food offerings.

Coinstar's amazing new kiosks have the ability to not only serve up a cup of coffee, but also brew swankier café-style drinks for just 50 cents more. With plans to place 500 kiosks across the U.S. in the next year, this venture will put America on the map again when it comes to automated food vending, a category in which we are way behind the times.

"This relationship is a logical next step in our strategy to bring great coffee to new and unexpected locations where it's traditionally been hard to find great coffee," said Jim McDermet, senior vice president and general manager of Seattle's Best Coffee, in a company release. "Our Seattle's Best Coffee fans will be delighted to find their favorite coffee now available around-the-clock at the places they visit regularly each day."

According to McDermet, the small kiosks will be more affordable and accessible for Seattle's Best Coffee customers to get their daily fix. For these reasons, Starbucks decided Coinstar was the only way to go when it came to finding a partner. The fact that revenue is expected to be about $180 million (if 15,000 kiosks are eventually unveiled) is just the cherry on top of the whipped cream latte.

About 50 vending stations have debuted so far, prompting Coinstar to announce a "coffee club" where frequent sippers can join a loyalty program and receive promotions.

For both innovative companies, the news of this unlikely merger is not as shocking as one would think. Coinstar and Starbucks have each continued to debut original, profitable ideas, and this newest agreement is no exception to the rule.

Starbucks closed Wednesday up 2% to $53.47, while Coinstar closed at up 6% to $62.85.

More from Benzinga
Jun 6, 2012 8:57PM
I'm betting these would do very well in college libraries.
Jun 6, 2012 7:06PM
Kiosk?  Sounds like a fancy word for a coffee vending machine.  The kind that have been around for 50 years or so...
Jun 7, 2012 7:58PM
Starbucks coffee is mediocre but consistent. Starbucks' Seattle's Best brand is horrible coffee. Starbucks went on about how it was selling the "coffee experience" and whatnot. The only benefit for this venture is Coinstar who gets to reappropriate their existing technology with the backing of a major brand name.
Jun 6, 2012 11:49PM
Starbucks is an over-rated coffee/shop. It's for people to lazy to make their own coffee.
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