More Bang for Your SBUX!


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While customers usually receive change when purchasing a hot cup of joe at any Starbucks (NASDAQ: SBUX ) location, it is now the company that turns their change back into cash that will be serving the coffee - wow, talk about a brain teaser. Coinstar Inc. (NASDAQ: CSTR ) has entered an agreement with SBUX to open hundreds of kiosks all over the country, much like the ones shoppers now dump mason jars full of change into now. The difference? They will brew coffee for $1.

Grocery stores, pharmacies and mass retailers will now carry kiosks dubbed "Rubi". Through the exclusive deal, CSTR will provide kiosks that only brew Seattle's Best Coffee, and SBUX will not be allowed to forge any other agreements placing its product in kiosks or vending stations across the country.

This newest SBUX development comes at a time when the company has continuously been pushing out new products, such as alcoholic beverages and energy drinks and attempting to ramp up sales at a fierce rate. With Keurig-cup sales not doing so hot , SBUX clearly needed to take the edge off with a fresh deal - one that is sure to prove successful.

CSTR's amazing new kiosks will have the ability to not only serve up a cup of coffee, but will also be able to make swankier café drinks for just 50 cents more. With plans to place 500 kiosks across the U.S. in the next year, this anomaly will put America on the map once again when it comes to automated food retailing, 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. "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-sized kiosks will be more affordable, approachable and accessible for Seattle's Best Coffee customers to get their daily fix. For these reasons, SBUX decided CSTR was the only way to go when it came to finding a partner to turn the dream into reality. 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 whip creamed latte.

About 50 vending stations have debuted so far, prompting CSTR to put a "coffee club" into the works where frequent sippers can join a loyalty program and receive promotions for their neighborhood kiosk and other hot spots for Seattle's Best Coffee.

For both innovative companies, the news of this unlikely merger is not as shocking as one would think. CSTR and SBUX's recent ventures have continued to bring about original, profitable ideas, with this newest agreement being no exception to the rule.

SBUX closed yesterday at $52.41, up 13.91% year-to-date, while CSTR closed yesterday at $59.29, up 29.91% year-to-date.

Follow me on Twitter @KateyStapleton

(c) 2012 Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: CSTR , SBUX

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