It is not enough that Starbucks (NYSE: SBUX) has to face McDonald's (NYSE: MCD) selling premium coffee at most of its outlets starting at 5 AM. Dunkin' Donuts has also hooked up with Procter & Gamble (NYSE:PG) to distribute its pre-packaged coffee to a number national grocery chains. P&G will actually roast, market, and distribute the new product.
To push product availability beyond traditional grocery store chain, P&G will also put the packaged coffee into Target (NYSE: TGT) and Costco (NASDAQ: COST).
Starbucks already markets its pre-packaged coffee in a number of food retail outlets.
With Starbucks stock near a 20-month low, trading at $28, the market is already concerned about whether its can continue to open retail outlets without hurting same-store sales. The company has about 14,000 stores worldwide and long-term wants to push that number to 40,000.
Based on the company's last quarterly report, revenue is still growing 20% year-over-year, but competition in the premium coffee segment of the market has heated up.
As competition targets the high end of the coffee market, Starbucks is becoming the victim of its own success.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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