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 Jason Dominy on March 20, 2008 at 7:36am
Shawn, you are right. I am reading Taylor Clark's book "Starbucked," and this is the angle I saw, as well. The book, by the way, gives good insight to his cutthroat ways, and looking at it in relation to this situation, makes perfect sense. That's all I am going to post about this, though, as frankly I am just tired of talking about it.
Comment by Shawn on March 20, 2008 at 7:32am
For quite some time now I've thought that Starbucks' focus had shifted towards competing with the McDonald's and Dunkin' Donuts of the world. I naively thought that Starbucks had moved beyond competing with the little guys and would, more or less, let us be. This move, to me, is akin to Starbucks purchasing the leases of struggling coffee shops and "clustering" around independents. This move is more competitive strategy than it is about the coffee. This move reminds me that I have to be sharp and attentive to ALL members of the Specialty Coffee world... no matter how distinguished my products are at a given time.
Comment by Hugh Mooney on March 20, 2008 at 7:20am
Tim, you're right. My comment was out of line. My apology, Ashlind.
Comment by Tim Noble on March 20, 2008 at 7:07am
Word, Jason.
Comment by Jason Dominy on March 20, 2008 at 6:31am
After sleeping on it last night, and having some kind of weird dream about our stores having some kind of unique brewing device (it wasn't a Clover), I have these thoughts.
1. Howard Schultz is still a despicable business guy. The kind with no regard for anyone else in his way. If you say that's the way it goes, I say you're wrong. You can both be successful and maintain integrity and respect in your industry.
2. If $tarbucks does work to elevate their coffee game by buying better and better coffee, including the treasured microlots and small farms, we are all in trouble. If you think CoEqCo had no choice when money was thrown around, think about the farmers who we "have relationships" with. I think of the cool work Peter and the CC boys do on that front, but the money dynamic becomes alot different for the farmers.
3. It's the posturing that makes me mad. Taking away whatever weapon the indie market has, is akin to the fight scene in Monty Python and the Holy Grail. Remember, "You've got no arms!" It's cutting away any thing that makes us different and/better, so all that's left is marketing. Now understand, the thing they can never take away is a better product and better service, but let's be honest. The money they spend on marketing and real estate makes that point not as valuable as it definitely should be, but it's still true. We DO have a better product as a whole.
4. My thought yesterday was I could see ol' Howie doing the Tiger Woods fist pump saying, "Yessss!" And that makes me hate him even more. Again, he's smart, wealthy, and winning at his game, that don't mean it's right.
Comment by Brady on March 20, 2008 at 6:30am
Exactly. Time to polish up our brewed-to-order programs. When their roll-out comes I really don't want to be seen as just "me too-ing" Starbucks... (Intelly? that would be ok...).
Comment by Jose E. Rodriguez on March 20, 2008 at 6:28am
I would rather see O.J. Simpson buy clover! (At least that would only be shocking ...as opposed to shocking AND disapointing!
I mean, How could Clover torpedo the entire independent coffee industry like that?
Comment by Anthony Rue on March 20, 2008 at 6:03am
Bingo. Let Starbucks do the heavy lifting in marketing proper prices for quality brewed coffee. That Shultz stated a target price of $3 per 12oz cup should be a good thing for everyone.

In the end, the clover is just a machine (albeit a very good machine for what it does). I'm reminded of all of the people I know who bought multi-core Mac Pros to run FCP or the latest/greatest Nikon or Canon cameras: just because you bought into the latest technology, it doesn't suddenly make you into a brilliant editor or photographer. Not every indie shop with a clover did justice to the coffee served on it, and there's no reason to believe that starbucks will be any different. And starbucks is at a disadvantage in the coffee and roast used in-shop. In other words, is this really any threat to either existing clover owners or to any shop dedicated to making great brewed coffee by other means? I don't think so.
Comment by Jason Dominy on March 20, 2008 at 6:00am
Tim, when I met you at Coffee Fest, I knew I liked you from the start. I couldn't have said it better myself. Love the brutal honesty. That's the thing about this board, speak it, but live it.
Comment by Loren Anthony on March 20, 2008 at 5:20am
You can also expect their "baristas" to screw it up no matter how much training they get on the Clover. The mahjority of them their heart isn't in coffee. It's just a job. They still don't know how to do it correctly. I can't say what I'd do if I was created a machine that was approached by Starbucks and I was having a hard time selling the damn things. I know right now it's EXTREMELY hard for me just opening up a shop and day-to-day Im living on the financial "edge" so to speak my eentire family is depending on this to work. If a hot shot money maker came through the doors right now I at my most vulnerable moment. I may have heard him out. Im sure if the folks at Clover are anything like alot of us, they at least set some standards and ground rules between themselves and SBUX on how all of this is going to go down. Maybe SBUX buying into will make the machines more affordable for us to buy? Then higher quality roasted beans and better knowledge for the machine will still set us apart in regards to indys vs. SBUX?

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