Starbucks Coffee Company to Acquire the Coffee Equipment Company and Its Revolutionary Clover(R) Brewing System

Not sure what to think about this ... still in shock a bit. Will post more later.

Starbucks Coffee Company (NASDAQ:SBUX) today announced that it has entered into an agreement to acquire The Coffee Equipment Company and its proprietary Clover(R) brewing system. The Coffee Equipment Company is a privately held coffee equipment developer and manufacturer based in Seattle, Wash. Terms of the transaction were not disclosed.

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Comment by Ray on March 22, 2008 at 2:13pm
I don't know if this is news, but Stumptown has pulled all of its Clovers. Personally, not knowing details of the conversation that most likely preceded that decision, I think they may have jumped the gun. I think it's a bummer. I mean, it still makes a tasty cup of coffee. It still is, arguably, the most transparent cup of coffee while still being production-based. My only speculation is that Duane Sorenson or someone at Stumptown knows something that we don't; whether it be about the deal, the service network, a new brewer down the pipe, whatever.
Comment by Rich Westerfield on March 22, 2008 at 6:37am
If I was in queue to buy one and was in a market that didn't have a Clover yet, I'd be asking for a discount. The PR that Clover did when entering a new market was impressive and could be credited with getting the ball rolling for a lot of shops. There is significant value in that and it has to be considered as part of what a shop is paying for. Now that PR is gone - or at the very least compromised because it's now associated with Starbucks.
Comment by Chris/Dale on March 21, 2008 at 10:39pm
I'm getting ready to work at a shop that has one already and i'm curious as to how the service of the already sold clovers will maintained for parts and the like. Whether or not a company owned by starbucks will maintain it's integrity with regards to that service to those third waves who have paid 11,000 (or whatever the going rate was.)

I just have this picture of the end of Raiders of theLost Ark with the clover in a wooden crate being carted into a big warehouse with hundreds of other great items.(i also have a picture in my head of a scene from the Kubrick classic 2001: a space oddyssey but i'll keep that one to myself)

All hail the pressbot and the magnificent customer service that accompanies it.
Comment by Stickman on March 21, 2008 at 8:08pm
I see the next generation of Clovers as something more Rube Goldberg-esque that can serve-up more drinks in the same time with auto-hoppers distributing chutes-full of beans into ultra-sonically-cleaned grinders. I'd like to get my hands on an original Clover and keep it as a novelty...Like an Edsel or an Avanti or a Honda Dream. Valuable, cool but perhaps not as valid as it could have been. We'll see.
Comment by Stickman on March 21, 2008 at 6:28pm
You know, we used to joke that a Clover could make Folger's taste good...And maybe it could or maybe we were looking at it with rose-coloured glasses because it was something that was exclusively ours - something within the domain of coffee-geeks, something that gave us cred and legitimacy. Sounds like a crutch to me.
SB will always be SB and they will always attract a certain client and the shops run by the kind of people who are on this site will always be different. Good for SB and Clover for getting hooked-up; glad they get along so well and I hope nobody feels bad in the morning. I don't mind some competition to keep our quality up. I believe that the single origin beans we brew up in the French Press, the wicked espresso that's roasted just-so, the nice people behind my counter will outcompete a multi-zeroed buy-out. Frankly, I think they're clutching at straws if they believe this will change their image and their quality in general terms.
Still not worried.
Comment by Matt Milletto on March 21, 2008 at 4:47pm
One question I am getting from numerous clients and past school students is if they should still buy a Clover? (for some it is still possible) nearly all of them have already started the process with Clover, or a distributor.

What are some peoples thoughts?, would love to hear from those of you with a little more inside info ... thanks. Interested in repair issues, support, parts, press, etc.

I have my own opinions on this subject, but would like to hear others.

Comment by Alex T. Fernandez on March 21, 2008 at 11:54am
Great point Lorrie. Even though I still stand by my "sell-out" cry I can see the need for us to put less focus on equipment and allow the real star of our shops, the coffee, to shine.

When one of my sbux confusing customers asks me for a "grande" latte, I don't throw them out of the shop. I make the best damn 16 oz. latte I can and hope it might turn them on to better coffee.

I do have a perhaps unfair pet peeve though...sbux employees are not baristas. It's like calling McDonald's workers Chef's, it's almost factually untrue. My brain revolts against my eyes when someone makes that comparison.
Comment by Lorrie McCullaugh on March 20, 2008 at 3:24pm
First of all, I would like to congratulate Zander and the entire CoEqCo team. Selling the company was no doubt a difficult decision, and I am sure that Zander and crew did what was not only in their best interest, but in the best interest of continuing to support those in the industry that have already purchased the Clover. I applaud their hard work and dedication to the industry, and I look forward to more innovative products from the team in the future.

It is my opinion that the only people that need fear the "Oh, a Clover? Like they have at Starbucks?" customers sure to come are the people that have chosen to market their brewer rather than their coffee. There are several Starbucks that still sport traditional espresso machines, and you don't hear people walking in to quality focused independants and saying "Oh, an espresso machine? Like they have at Starbucks?"

The Clover is a tool for making coffee. But it is the coffee that should be the star of the pairing, not the machine. I see this as a wonderful opportunity for the early adopters of the Clover to put the focus back where it should have been in the first place. ON THE COFFEE. The buzz in the media about the Clover in recent months has been good for shops that have a Clover. Having a Clover may bring people in the door, but those people should leave talking about the coffee, not the equipment. I believe that if your customers are leaving your shop talking about the Clover, then you have failed to deliver the message.

There are two options for those who continue to sport the Clover from here: 1) You can piss and moan about "losing your advantage" or 2) You can choose to let your passion, enthusiasm and love of coffee shine, and so doing, continue to elevate the consumer experience. Sadly, it seems that many will choose option 1.
Comment by Jason Dominy on March 20, 2008 at 2:56pm
I said I would not post again on this subject, but after Bruce's post, I must. Bruce, thanks for an inspiring and reminder that we are the captains of our destiny. We just have to find another way to skin the cat. (Not an actual cat, cause that wouldn't be cool. And oh yeah, PETA would be all over me like white on rice.)
Comment by Bruce Milletto on March 20, 2008 at 2:46pm
Ok, I have been following this thread for a couple of days now with great interest. I feel I could write a few thousand words about what this means to our industry, in my opinion, though none of us really know - do we.

But, what happened when the first espresso machine was improved upon? No longer was there one espresso machine manufacture in Italy but soon there were dozens. Now that this sale has put Clover on the map, outside the industry other entrepreneurs will see opportunity to develop even a better, and possibly less expensive mousetrap.

The fact that they take this wonderful invention out of the hands of independents - no matter how anyone here spins it, is a NOT necessarily good news today. But, if you own a clover you will have a fair amount of time to take advantage of the groundswell of interest and allow your customers to have a Clover coffee today... not in years when almost every Starbucks has one on their counter.

The time it will take to ramp up & saturate all their operations with these machines once they :-) buy a Boeing Hanger and produce thousands a year not dozens is yet another unknown... but it will not happen tomorrow or next year.

So what is the REAL bottom line here? It is what it has always been, "How does the heart of this industry compete - the independent coffee bar?"

We compete like we always have ... by being different and producing the best damn cup of coffee in your market with excellent customer care and service ... AND by providing a different experience from the chains, who cannot and will never provide PASSION in their operations consistently! On this fact alone the playing field is not equal - and you have the ball.

So, yesterday ... ONE component has been taken away- ONE!, that would allow you to stand out and produce a really great cup of coffee, using a new and different brewing process.

Remember the glass is still half full as there are dozens of other components that indy coffee can compete with and win - head to head with Starbucks.

We live in a country that provides for us the greatest opportunity in the world - the downside often, is it is an ocean and big fish thrive and survive on eating small ones.

This is a great wake up call to all of us. As someone said earlier WE are their competition not McDonalds. We are the threat to their business model. We are the small fish that they want for lunch - Remember...YOU know your part of the ocean better than they do - your the small shark and they are the whale... so swim fast and focus on what you can do to outsmart this lumbering giant of the Oceania Caffeine.

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