Starbucks Corporation (SBUX), Teavana Holdings, Inc. (TEA): These Acquisitions Are Primed for Profit

A single-served addition?

Demonstrated by its recent contract extension with Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) as well as its debut of the Verismo, Starbucks is still heavily focused on making it into consumers’ homes. That’s not surprising, though. Green Mountain’s dollar share of the single serve market has grown 25% over the last two years, something that helps explain their 141% growth in net sales over that time. Starbucks also touted the recent performance of K-cups featuring its own coffee blends as the company’s share of the premium single-serve beverage space grew 2.3% last quarter and did well throughout the last year in general. Green Mountain framed the contract extension as a testament to their Keurig platform, which could very well be the case as it has Starbucks anxious for a bigger sip. While an acquisition of Green Mountain makes for little more than an amusing speculation at this time, Starbucks has tagged the single-serve market as a lucrative opportunity and will continue to increase its exposure there if nothing else.

Avoiding complacency is a must for any business to thrive, but too much aggressiveness can deteriorate a company’s financial stature at the same time. Starbucks seems to have found a nice balance between these extremes, and the company’s acquisitions appear to be well thought out. It is a mark of truly skillful management that plans far enough ahead to take on strategic initiatives now which will blossom into a powerful synergy in the future, and that looks to be the case here.

The article These Acquisitions Are Primed for Profit originally appeared on Fool.com and is written by Patrick Facey.

Patrick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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