Starbucks Unit in Coinstar Kiosk Deal

Starbucks Corp. (SBUX)’s Seattle’s Best Coffee division signed a deal with Coinstar Inc. (CSTR) to sell coffee in thousands of kiosks in the U.S.

The “Rubi” kiosks will begin rolling out this summer at grocers, drugstores and mass-market retailers, the companies said yesterday in a statement.

“We have signed an exclusive deal with Coinstar to roll out the coffee kiosks that we’ve been testing” for more than a year, Jenny McCabe, a Starbucks spokeswoman, said in a telephone interview.

The kiosks, which grind and brew beans on demand and around the clock, will serve brewed coffee, mochas and vanilla lattes starting at $1 per cup, the companies said.

Starbucks, based in Seattle, expects to sell about 10,000 cups of coffee a year from each kiosk, McCabe said.

Starbucks is seeking to expand beyond its namesake products and boost sales with the more affordable Seattle’s Best Coffee brand, acquired in 2003. In February, the brewer said it would begin selling Seattle’s Best at Kmart stores and Chevron Corp. (CVX) gas stations. It’s also sold in some Yum! Brands Inc. (YUM)’s Taco Bell restaurants, Burger King Worldwide Holdings Inc. locations and Subway stores.

Seattle’s Best sells its coffee in bags numbered 1 through 5, indicating the strength of the roast. The brand is boosting its exposure after the closing of 475 Seattle’s Best Coffee locations within Borders Group Inc. stores after the bookseller’s bankruptcy.

Coinstar, based in Bellevue, Washington, already operates Redbox movie-rental and coin-counting kiosks.

Starbucks, which brought in $11.7 billion in sales in the year ended Oct. 2, fell 2.8 percent to $52.41 yesterday at the close in New York. The shares have gained 14 percent this year.

Coinstar rose 3.7 percent to $61.49 yesterday in extended trading after the announcement. Earlier, the shares closed at $59.29, for a gain of 30 percent this year.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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