Green Mountain Coffee Roasters Inc (GMCR.O) announced the launch of Keurig Rivo, its long-awaited, single-cup espresso machine, on Thursday, sending its shares up more than 2 percent.
The Rivo, developed in partnership with Italy's Luigi Lavazza SpA, will be able to make cappuccinos and lattes at home and go head-to-head with the Verismo system, which Starbucks Corp (SBUX.O) launched last month.
The Rivo will have a suggested retail price of $229.99 and will be available exclusively at select Bloomingdales stores starting in mid-November, becoming more widely available by the spring.
The Rivo uses fresh milk for its barista-worthy drinks, whereas the Verismo uses milk pods.
The basic Verismo sells for $199, while a larger version, with temperature controls and self-cleaning is priced at $399. Starbucks is also selling a separate machine that heats and froths milk or dairy alternatives such as soy milk for about $60.
SunTrust Robinson Humphrey analyst Bill Chappell said milk appeared to be the biggest difference.
"From what we have learned about the Verismo, the use of milk pods versus fresh milk seems to be its biggest drawback," Chappell said.
Green Mountain has been facing increased competition since certain patents governing the design of its K-Cups expired, leading to the emergence of a host of lower-cost competitors, including private-label brands that are producing Keurig-compatible cups without a licensing agreement with Green Mountain.
Green Mountain shares were up 60 cents, or 2.4 percent, at $25.34 in morning trading.
(Reporting By Siddharth Cavale in Bangalore and Martinne Geller in New York; Editing by Sreejiraj Eluvangal and Maureen Bavdek)