Did Starbucks (SBUX) Just Deal GMCR a Death Blow?

Starbucks (NASDAQ: SBUX) just entered the single-serve coffee market. Yes, the same single-serve market Vermont’s own Green Mountain Coffee Roasters (NASDAQ: GMCR) has dominated the last few years.

Perhaps no longer.

Starbucks announced today that it will begin selling its new single-serve coffee brewer, the Verismo, both online and in its thousands of cafes around the world. The Verismo has the ability to make coffee, lattes and espressos. That’s bad news for Green Mountain Coffee and its Keurig machines, which are used to brew its single-serve K-Cup packets.

The sell-off has already begun. GMCR shares plummeted almost 10% today after Starbucks announced it was throwing its hat into the single-serve arena. Meanwhile, Starbucks shares rose 2.15%.

Delving into the single-serve market should only help Starbucks. But the effect on Green Mountain could be devastating.

We knew this was coming. This is why hedge funder David Einhorn hammered away at GMCR during last year’s Value Investing Congress. Green Mountain’s K-Cup patents expired this month – hence the stock’s 74% decline over the past year.

Green Mountain currently occupies roughly 90% of the single-serve coffee market. With Starbucks and all its commercial clout now providing some formidable competition, that number is sure to drop.

Will GMCR shares continue to drop as their single-serve market share erodes? They’re not off to a great start.